CAIRO (Reuters) - Egypt has reached a preliminary agreement with a team from the International Monetary Fund for a $4.8 billion loan, a minister said on Tuesday.
The deal is seen as a vital step for shoring up Egypt’s battered finances and rebuilding the confidence of investors, who have been looking to the IMF to give its seal of approval to the government’s economic programme.
“We have a preliminary agreement with the technical team of the IMF,” Planning and International Cooperation Minister Ashraf al-Araby told a news conference with the head of the IMF delegation, Andreas Bauer, and other IMF officials.
The agreement would go to the IMF board to be finalized on December 19 with the first tranche of the loan to be released immediately the board approved the deal, IMF officials said. One IMF official said the loan would be disbursed over 22 months.
The loan carries an interest rate of 1.06 percent, Bauer said, adding that there were also fees attached.
“We are happy that the IMF is supporting our programme at this stage,” Araby said, adding that the economic programme “would achieve social justice and targets those on limited incomes.”
The minister said details of the economic programme would be announced on Wednesday and posted on a government website after that.
Egypt has outlined some measures already to cut back on fuel subsidies, a big drain on state coffers, and to raise revenues.
The steps include ensuring subsidized cooking gas cylinders reach the most needy, ending subsidies on 95-octane gasoline and hiking the sales tax that now stands at 10 percent.
Writing by Edmund Blair; editing by Ron Askew