View of Egyptian pound inside a currency exchange office in Cairo, Egypt, on September 7. Egypt reached an agreement with the IMF for a $3 billion loan, which will help stabilize and reform its economy. EPA-EFE/KHALED ELFIQI
Oct. 27 (UPI) -- The International Monetary Fund reached an agreement on a $3 billion loan for Egypt Wednesday, giving the country crucial economic support as it undergoes extensive economic reform.
The agreement between Egypt and an IMF team comes in the wake of the pound's crash, which has reverberated throughout the global economy. The staff-level agreement reached by the two parties includes economic policies that will be supported by the Extended Fund Facility over the course of a 46-month agreement.
"The rapidly changing global environment and spillovers related to the war in Ukraine are posing significant challenges for countries around the world, including Egypt," said Vladkova Hollar, deputy unit chief of the IMF.
Hollar said the agreed upon policy and loan will expand social protections, implement a flexible exchange rate regime, phase out wasteful practices and carry out "an ambitious structural reform agenda."
The Extended Fund Facility provides assistance to countries with "serious payment imbalances" stemming from slow growth and structural flaws. It is a lending facility under the IMF's General Resource Account. Arrangements with the EFF use longer repayment periods than many other funding agreements to nurture stability.
"The government's fiscal policy under the EFF will be anchored to the reduction of general government debt and gross financing needs," Hollar said. "Continued fiscal consolidation will be supported by the implementation of the government's Medium-Term Revenue Strategy that aims to improve the efficiency and progressivity of the tax system."
Egypt's currency has depreciated by 15% against the dollar, according to its government. This places Egypt among the countries most at risk of defaulting on foreign debt.
The British pound has been in turmoil due to the uncertainty of the country's leadership. In September, the pound fell to its lowest level against the dollar since 1985. This is compounded by a surge in the U.S. dollar's value.
