## Press Release: IMF Reaches Staff-Level Agreement with Egypt on a US$4.8 Billion Stand-By Arrangement

_IMF News, November 20, 2012_

## Source details

**Canonical URL:** [Press Release: IMF Reaches Staff-Level Agreement with Egypt on a US$4.8 Billion Stand-By Arrangement](https://www.imf.org/en/news/articles/2015/09/14/01/49/pr12446)

## Other formats

- [Markdown version](/en/news/articles/2015/09/14/01/49/pr12446/index.md)
- [Structured JSON version](/en/news/articles/2015/09/14/01/49/pr12446/index.json)
- [Bundle manifest](/en/news/articles/2015/09/14/01/49/pr12446/bundle-manifest.json)

## Bibliographic details
- Authors: Arrangement Press Release No.
- Published: November 20, 2012

---

### Agreement overview
- IMF staff mission, headed by Mr. Andreas Bauer, Division Chief in the Middle East and Central Asia Department, and the Egyptian authorities reached a staff-level agreement on a 22-month Stand-By Arrangement (SBA).
- SBA amount: about US$4.8 billion (equivalent to about SDR 3.16 billion, or 335 percent of Egypt's quota in the IMF).
- Purpose: to support the government's economic program through fiscal year 2013/14.
- Next step: Egypt's request for an SBA is expected to be submitted to the IMF Executive Board for approval in a few weeks.
- Mission statement emphasizes promotion of economic recovery, addressing fiscal and balance of payments deficits, and laying the foundation for rapid job creation and socially balanced growth in the medium term.

### Fiscal measures and targets
- Fiscal reforms are described as a key pillar of the program, focusing on:
  - Reducing wasteful expenditures, including by reforming energy subsidies and better targeting them to vulnerable groups.
  - Raising revenues through tax reforms, including increasing the progressivity of income taxation and broadening the general sales tax (GST) to become a full-fledged value added tax (VAT).
- Intended use of additional resources:
  - Boost social spending and infrastructure investment.
  - Gradually reduce the large budget sector deficit from almost 11 percent in 2011/12 to 8.5 percent of GDP in 2013/14.
  - Budget sector primary deficit to decline from 4 percent in 2011/12 to 0.6 percent in 2013/14 and is projected to turn positive in the following fiscal year.
- Expected outcomes:
  - Alleviate the public debt burden.
  - Free up financing to support social spending and private sector growth.

### Public financial management, transparency, and accountability
- Measures to strengthen public financial management and transparency include:
  - Broadening the coverage of the treasury single account.
  - Regular publication of key budgetary and financial sector information.
- These measures are intended to facilitate attainment of the fiscal objectives under the authorities' program.

### Monetary and exchange rate policies
- Policy objectives:
  - Ensure declining inflation over the medium term.
  - Enhance Egypt's international competitiveness to stimulate trade and attract capital inflows.
  - Increase international reserves to protect against external shocks.

### Business environment and private sector development
- Authorities aim to ensure a fair and competitive business environment with a level playing field among investors by:
  - Enhancing the transparency of registration and licensing procedures.
  - Facilitating the resolution of investment disputes.
  - Supporting small and medium-size enterprises.
- Rationale: Fair and unencumbered access to economic opportunities is important for socially balanced private sector growth and job creation.

### Financing package and external support
- The authorities' program will be supported by a financing package of $14.5 billion in loans and deposits on favorable terms from a range of bilateral and multilateral partners, including the IMF.
- Role of external financing:
  - Allow gradual adjustment of the economy.
  - Substantially reduce Egypt's cost of borrowing, given the much higher interest rates on domestic loans.

### Implementation, dissemination, and IMF support
- Broad-based domestic and international support is deemed crucial for successful implementation.
- Authorities intend to disseminate the contents of their economic program to a wide range of domestic stakeholders.
- IMF support includes providing financial resources and technical assistance in the fiscal, financial, and statistical areas.

*Source: Press Release No. 12/446, November 20, 2012 — IMF press statement by Mr. Andreas Bauer*

---

## Content in this bundle

- [Pr12446apdf (PDF)](/-/media/websites/imf/imported/external/arabic/np/sec/pr/2012/pr12446apdf.pdf){rel="external" type="application/pdf"}

---

## References

- [Arab Republic of Egypt and the IMF](http://www.imf.org/external/country/EGY/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [Egypt -- Fast Facts](https://www.imf.org/external/np/exr/countryfacts/egy/index.htm)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr12446_