Egypt IMF loan to be repaid in 10 years, targets higher growth

Egypt's $12 billion three-year IMF loan program will be repaid in 10 years with a 4.5 year grace period and the reforms agreed with the international lender aim to boost growth and curb inflation, the finance ministry said on Sunday.

It said the reforms target GDP growth of 5.5 percent and inflation of less than 10 percent by the 2018-19 fiscal year.

The International Monetary Fund approved on Friday a program aimed at helping Egypt close its budget gap and rebalance its currency markets.

Egypt’s headline inflation was near 14 percent in October and the economy grew 4.3 percent in the 2015-16 fiscal year.

BofA recommends buying Egyptian T-bills

Meanwhile, In a sign of foreign investors’ improving sentiment towards Egypt after it floated its currency, analysts at Bank of America Merrill Lynch said they recommended buying Egyptian Treasury bills.

Investors should buy six-month T-bills without hedging them to benefit from high yields and the likelihood that the Egyptian pound has bottomed against the US dollar, after tumbling in the initial days after its Nov. 3 float, Bank of America analysts said in a note dated Nov. 11.

Bank of America said Egyptian T-bills were a typical carry trade to be held to maturity; it said it would enter the trade at an exchange rate of 16.5 pounds to the dollar, aiming for the pound to rebound eventually to 15.

Egyptian T-bills were popular among foreign investors until 2011, when political instability ushered in years of uncertainty about the exchange rate and economy.