IMF chief foresees ‘prompt’ start of Egypt lending

Egypt may soon receive the first tranche of a crucial $12 billion aid package, the head of the International Monetary Fund Christine Lagarde said Saturday.

Officials in Cairo reached an agreement in principle with the IMF in August for the aid package but it was conditioned on a series of reforms and remains subject to approval by the Fund’s executive board.

“To my knowledge, these prior actions are almost completed,” Lagarde told reporters during the annual meetings of the World Bank and IMF in Washington. “I very much hope that the board can meet promptly.”

To meet the Fund’s requirements, Egypt has in particular adopted a value-added tax in the hopes of raising fresh revenue to offset the recent collapse of tourism and foreign investment.

On Friday, the IMF’s Middle East head Masood Ahmed said the Fund’s approval could come “by the end of this month” or in early December, adding that about $6 billion in additional support was expected from other donors.

The first tranche of IMF lending will amount to $2.5 billion, he said.

More than five years after a 2011 uprising that toppled President Hosni Mubarak, the Egyptian economy is suffering from political instability and violence.

Cairo is also facing a severe dollar shortage and a sharp drawdown of foreign exchange reserves at its central bank.