On Nov. 11, the executive board of the International Monetary Fund (IMF) approved a three-year extended arrangement under the Extended Fund Facility to give $12 billion to Egypt to support the economic reform program developed by the Egyptian authorities.
Under the arrangement, $2.75 billion will be disbursed immediately and the remaining amount will be phased over the duration of the program, subject to five IMF reviews.
The economic reform program announced by the government in agreement with the IMF aims to gradually lift subsidies on energy, water and electricity, reduce the budget deficit, cut public spending, restrict allocations for social justice in the new budget and impose new taxes on citizens to increase revenue.
The IMF said in its Nov. 11 press release that the loan mainly aims to reduce the state budget deficit and provide protection for low-income households. Egypt’s budget deficit for 2015-16 stood at 12.2% of the gross domestic product, and the objective is to reduce it to 8.5-9.5% in 2016-17.
The finalization of the IMF deal and the disbursement of the first tranche triggered questions by economic experts about the fate of the received funds.
