World Bank approves $5B loan to Egypt
Egypt received a welcome $500M handout from the African Development Bank last week. (Tribune.com.pk)
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The World Bank has agreed on a new $5 billion loan package to Egypt, the International Cooperation Minister Sahar Nasr announced during an event where the Prime Minister Sherif Ismail singed for the first tranche of $3 billion to the country.
The World Bank will loan Egypt $8 billion overall in a series of payments, Nasr said.
The first tranche of the loan, amounting to $1 billion, will be delivered to Egypt before the year's end, while the remaining amounts will be disbursed over the next three years, Nasr said during the event on Saturday.
Earlier this week, Nasr revealed that the $3 billion loan has a maturity life of 35 years and carries an annual interest rate of 1.68 percent with a grace period of five years.
The loan would help the government secure economic growth and provide much-needed foreign currency liquidity to help offset the state's budget deficit.
However, the minister also said on Saturday that the breakdown of the new $5 billion package loan will be as follows: $3 billion will be allocated for implementing projects in marginalised areas, as well establishing industrial zones in Port Said and the Suez Canal area; while the remaining $2 billion will be granted from the International Finance Cooperation which seeks to support private sector growth.
Nasr did not provide an exact date for the signing of the remaining amount of money in the loan package.
Egypt, which is currently experiencing a foreign liquidity crunch, requires foreign currency for imports of basic foodstuffs and raw materials for industries.
Foreign currency reserves stood at $16.44 billion at the end of November.
Egypt embarked on a politically sensitive fiscal reform programme following the election of President Abdel-Fattah El-Sisi in June 2014. The first phase of the programme saw fuel subsidy cuts, raising prices at the pump by up to 78 percent.
Egypt's economy has suffered from political turmoil since the 2011 revolution that toppled autocrat Hosni Mubarak.
Billions of dollars in financial support from Gulf Arab allies have helped keep the economy afloat.
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