CAIRO, — The Egyptian Government has reached an initial agreement with the International Monetary Fund according to which the IMF will lend Cairo USD 12 billion to support state reforms, the Central Bank of Egypt (CBE) announced on Thursday.

CBE Governor Tarek Amer said at a joint news conference with an IMF delegation that the government planned to finance its economic programs with USD 21 billion for three years, including USD 12 billion provided by the IMF and the rest would be secured as bonds, in addition to some other financial contributions by the international bank as well as floating five to six government companies in the bourse (2016-2017).

Egypt cannot develop solely with domestic investments; it rather needs mega enterprises, he said, adding that Cairo, being a contributor to the IMF, enjoys the right to solicit such grand financial aid from the international financial institution.

Moreover, IMF’s contributions to the government economic schemes bolster confidence in the Egyptian economy, he elaborated. “We’ve got to do what is necessary and in a manner that serves our country,” he re-stressed.

For his part, the head of a visiting IMF mission, Chris Jarvis, affirmed working out a loan accord with Cairo but cautioned it needed to be endorsed by IMF board to become final.

He said the Egyptian Government recognizes the need for quick implementation of economic reforms to restore macroeconomic stability and to support strong, sustainable and job-rich growth.

The program aims to improve the functioning of the foreign exchange markets, bring down the budget deficit and government debt, and to raise growth and create jobs, especially for women and young people.

It also aims to strengthen the social safety net to protect the vulnerable during the process of adjustment.

“The government’s fiscal policy will be anchored to placing public debt on a clearly declining path toward more sustainable levels. Over the program period general government debt is expected to decline from about 98% in 15/16 to about 88% of GDP in 2018/19. The aim is to raise revenue and rationalize spending, to reduce the deficit and to free up public funds for high-priority spending, such as infrastructure, health and education, and social protection,” he said.

“As indicated in the budget approved by the parliament, the government will adopt the VAT law after approval by the parliament, and will continue the program that began in 2014 to rationalize energy subsidies. It will advance the structural reform agenda to help increase investment and strengthen the role of the private sector,” he added.

He also hinted at efforts at levels of social security, revamping the financial and investments sectors.

He further stated, “With the implementation of the government reform program, together with the help of Egypt’s friends, the Egyptian economy will return to its full potential. This will help achieve inclusive job-rich growth and raise living standards for the Egyptian people. We at the IMF are ready to partner with Egypt in this program. We will also encourage other multilateral agencies and countries to support Egypt. We have talked to our colleagues in the World Bank and the African Development Bank and they are willing to help. It would also be very helpful for Egypt’s bilateral partners to step forward at this critical time.

Source: Name News Network