Egypt nets $2B in financing as IMF deal nears

Egypt secured $2 billion in financing from international banks, a day before the International Monetary Fund’s board meets to consider a $12 billion loan officials say will help restore investor confidence in the economy.

The central bank said the repurchase transaction with overseas banks has a maturity of one year, with the funding provided against newly issued dollar-denominated sovereign bonds. It’s the latest effort to bolster foreign reserves and ease a dollar shortage crippling the economy, following last week’s decision to float the Egyptian pound along with measures aimed at stabilizing the government’s fiscal position.

The Finance Ministry said it issued $4 billion in bonds on the Irish Stock Exchange that were bought by the Egyptian central bank to use partly as collateral for the repurchase agreement. That means the additional funding going toward Egypt’s reserves amounts to $2 billion, Deputy Finance Minister Ahmed Kouchouk said.

Finance Minister Amr El-Garhy said on Al-Arabiya television that bonds were chosen over other financing options due to “elevated” interest rates in parts of the market.