IMF confirms increasing Egypt's bailout loan to $8 billion

abcnews.go.com:

The executive board of the International Monetary Fund has confirmed a deal with Egypt to increase its bailout loan from $3 billion to $8 billion

CAIRO — The executive board of the International Monetary Fund confirmed a deal with Egypt to increase its bailout loan from $3 billion to $8 billion, in a move that is meant to shore up the Arab country’s economy which is hit by a staggering shortage of foreign currency and soaring inflation.

In a statement late Friday, the board said its decision would enable Egypt to immediately receive about $820 million as part of the deal which was announced earlier this month.

The deal was achieved after Egypt agreed with the IMF on a reform plan that is centered on floating the local currency, reducing public investment and allowing the private sector to become the engine of growth, the statement said.

Egypt has already floated the pound and sharply increased the main interest rate. Commercial banks are now trading the U.S. currency at more than 47 pounds, up from about 31 pounds. The measures are meant to combat ballooning inflation and attract foreign investment.

The Egyptian economy has been hit hard by years of government austerity, the coronavirus pandemic, the fallout from Russia’s full-scale invasion of Ukraine, and most recently, the Israel-Hamas war in Gaza. The Houthi attacks on shipping routes in the Red Sea have slashed Suez Canal revenues, which is a major source for foreign currency. The attacks forced traffic away from the canal and around the tip of Africa.

“Egypt is facing significant macroeconomic challenges that have become more complex to manage given the spillovers from the recent conflict in Gaza and Israel. The disruptions in the Red Sea are also reducing Suez