The International Monetary Fund (IMF) said it signed an initial agreement with Egypt on Thursday to loan the Middle Eastern country $12 billion over three years to help fix its ailing economy.
The IMF said the loan, which is subject to approval by the IMF's Executive Board, comes in support of a government reform program that aims to alleviate the demand for black market dollar trading, bring down the budget deficit and the government debt, as well as raise growth and create jobs.
"Egypt is a strong country with great potential but it has some problems that need to be fixed urgently," an IMF statement said, adding that government measures include tax increases and cuts in electricity subsidies.
Egypt's economy has been struggling since the 2011 uprising that overthrew longtime autocrat Hosni Mubarak, with high inflation, foreign currency shortages, and lack of tourism and investment that has hit both business and the broader population's well-being.
It called on the IMF, the U.S.-based global lender of last resort, after having exhausted billions of dollars in aid from wealthy Gulf Arab benefactors recently humbled by low oil prices — and now turned off by persistent bureaucratic hurdles to investing in Egypt.
Cairo hopes the loans can generate momentum that will boost growth and reassure potential investors.
The government's economic program states it will focus efforts on alleviating any effects on the poor, who will in all likelihood feel the pain on the short-term that could spark trouble on the streets. The program also says it aims to ensure that any economic upturn will bring benefits to the entire population of 91 million — and not just small elite sectors of society as has been the case in the past.
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