Egypt got confirmations from friendly states to offer the country 16 billion U.S. dollars to finance its deficit and reform, said the governor of the Central Bank of Egypt (CBE) in a press conference Thursday.
CBE Governor Tarek Amer made the remarks hours after the central bank announced devaluation of the local currency by 48 percent to curb the hike and shortage of the U.S. dollar in the Egyptian market.
Amer said that the move is part of an economic reform program to limit the budget deficit, push local production, boost foreign investments and save funds to improve healthcare and education services.
“Now foreign investors see large chances for investment in Egypt amid the economic reform program,” said Amer, stressing the devaluation decision is “a great turning point in Egypt’s economic course.”
Egypt has been struggling to survive a severe economic recession that led to a decline in foreign currency reserves, a growing budget deficit to reach 339.5 billion Egyptian pounds (about 24.6 billion dollars according to new rates), which represents 12.2 percent of the gross domestic product, and rising foreign debts to recently reach 55.8 billion dollars.
The situation led the country to resort to a 12 billion dollars’ loan from the International Monetary Fund (IMF), whose initial agreement has been reached in August, and it is expected to be accompanied by reforms including fuel and energy subsidy cuts.
“We have communicated with the IMF and we received positive reactions to our economic measures,” Amer said.
Meanwhile, the IMF welcomed in a statement the CBE’s decision to float the Egyptian pound and said it would boost competitiveness and attract foreign investment.
“We welcome the Central Bank of Egypt’s decision to liberalize the foreign exchange system and adopt a flexible rate regime,” said Chris Jarvis, chief of IMF mission for Egypt, in the statement.