Egypt has secured a $3 billion loan deal with the International Monetary Fund conditioned on currency depreciation and further cuts to subsidies, the government said Thursday.
The Egyptian pound shed 17 percent of its value against the dollar after the staff agreement was announced. The fund has long been urging Egypt to allow greater exchange rate flexibility.
Egypt has been hit by inflation and is among the world’s top five countries most at risk of defaulting on its foreign debt, according to the international credit rating agency Moody’s.
The IMF deal is conditioned on reforms that include subsidy cuts, bringing yet more pain for struggling households in North Africa’s most populous nation.
In August, global investment firm Goldman Sachs estimated that Egypt would need about $15 billion to repay its foreign debt, currently estimated at about $150 billion.
Prime Minister Mostafa Madbouly said Thursday, apart from the latest $3 billion loan, Egypt has also unlocked another $1 billion from the IMF from a facility dedicated to developing countries.
The loan program is scheduled to run for four years and is due to be sent to the IMF board of directors for approval in December, Madbouly said.
Without specifying which, Madbouly said regional organisations are also injecting additional $5 billion.