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The IMF and Egypt have reached a reached a staff-level agreement on economic policies and reforms that will be supported by a $3 billion (SDR2.35 billion) under the Extended Fund Facility (EFF).
The move comes hours after the Egyptian central bank said it moving to a more flexible exchange-rate regime and raised borrowing rates by 200 basis points. Egypt raises rates, moves to flexible exchange rate regime.
The pound fell 10% following the bank's announcements. Egypt's pound weakens by 10% after CBE's move to flexible currency regime.
The IMF arrangement is expected to unlock a large multi-year financing package of $5 billion from multilateral and regional partners to strengthen Egypt's external position, said Ivanna Vladkova Hollar, IMF's Mission Chief for Egypt in a statement on Thursday.
"The new EFF aims to safeguard macroeconomic stability and debt sustainability, improve Egypt’s resilience to external shocks, strengthen the social safety net, and step-up reforms that underpin higher private-sector-led growth and job creation," the statement added.
Egypt has also requested financing under the newly created Resilience and Sustainability Facility (RSF), which could unlock up to an additional $1 billion.
(Writing by Brinda Darasha; editing by Seban Scaria)
