Egypt’s deputy finance minister revealed on July 28, 2016 that a first tranche of a t least $2 billion could be obtained within the next two months, in the framework of talks to secure financial support from the International Monetary Fund.

Hit by the fall in oil prices and tourism revenues plunge which is due to security concerns, the government of Egypt has developed an ambitious plan to mobilize $21 billion ($7bn per year), of which 12 billion from the IMF and $4.5 billion from the World Bank and African Development Bank. In the meantime, the country is about to launch a call to tender for its Eurobond.

Egypt is not the only country in the Maghreb to have demanded support from the international institution. Morocco and Tunisia preceded it. IMF seems to have re-found its trust in this region which has often been condemned for conditions associated with its financing agreements.

Only Angola has recently rejected IMF’s financial aid, preferring to negotiate a $500 million commercial loan with GEMPCORP, a capital-investor which focuses on emerging economies. Let’s recall that this is third time that Egypt is trying to secure an agreement with the international finance institution.

Faithful to its principles, the IMF demanded the review of its subsidy policy (especially oil and gas focused) and its tax regulation. Al Sissi’s government already took a step regarding subsidies. It is left with the tax regulation regarding which Egypt could establish strong commitments, according to local analysts.

The Egyptian Exchange welcomes the progress. Indeed, investors estimate that inking an agreement with the IMF should bring some take weight off the country’s economic system, which is currently suffering from a low level of foreign exchange reserves that impair factor costs. The EGX 30 which regroups the market’s 30 largest firms grew by 1.8% on July 28, 2016 to 8,024.4 pt.

Idriss Linge