Egypt seeks aid from IMF amid virus downturn

A man walks along the Abbas bridge along the Nile river connecting the Egyptian capital Cairo to its twin city of Giza, at midday on April 24, 2020. (AFP / Mohamed el-Shahed)
Short Url
Updated 27 April 2020

Egypt seeks aid from IMF amid virus downturn

  • PM Mostafa Madbouli says IMF aid package crucial as flights are grounded and tourism halted

CAIRO: Egypt is seeking an aid package from the International Monetary Fund to offset the economic impact of the coronavirus pandemic, Prime Minister Mostafa Madbouli said Sunday.

In a televised press conference with the central bank governor and other ministers, Madbouli did not specify the size of the one-year financial aid package the government was seeking from the IMF alongside technical assistance.

He said the loan would be negotiated “within days.”

Touting the North African economy’s strong performance before the outbreak, he said the aid package was crucial given that flights are grounded and tourism halted.

“No one knows when this crisis will end so we wanted to take some measures that would build on the economy’s gains, especially after the complete shutdown of the aviation and tourism sectors,” Madbouli said.

Egypt’s tourism sector earned $12.6 billion in 2019, the highest figure in nearly a decade.

But the impact of coronavirus has been severe. Foreign reserves dropped from $45.5 billion in February to $40.1 billion at the end of the march, central bank governor Tarek Amer said.

Planning Minister Hala Saeed said that even though the “unprecedented crisis” prompted by the virus had affected global markets, Egypt was still on track to achieve 4.5 percent growth this year.

The country loosened its lockdown restrictions with the beginning of the holy month of Ramadan, allowing shops and malls to trade on weekends and reducing curfew hours by an hour to 9 p.m. until 6 a.m.

Egypt previously signed a $12 billion aid package with the Washington-based IMF in 2016, with the last tranche paid out last year.

Since the 2011 revolt that toppled former President Hosni Mubarak, the economy of the Arab world’s most populous country has sustained multiple shocks caused by political instability and security issues.

The government has imposed austerity measures in recent years to try to reduce its deficit, including cutting subsidies on fuel and electricity.


Oil surges on hopes of new deal on output cuts

Updated 02 June 2020

Oil surges on hopes of new deal on output cuts

  • Brent price has doubled in five weeks
  • OPEC talks may be brought forward

DUBAI: Oil prices surged toward $40 a barrel on Monday as hopes rose for an early agreement to extend the big production cuts agreed by Saudi Arabia and Russia under the OPEC+ alliance.

Brent, the global benchmark, jumped by more 9 percent to nearly $39, continuing the surge that has doubled the price in five weeks — the best performance in its history. It recovered after record supply cuts agreed between the 23 countries of the OPEC+ partnership, and enforced cuts in US shale oil.

DME Oman crude, the regional benchmark in which a lot of Saudi Aramco exports are priced, rose above $40 a barrel for the first time since early March.

Market sentiment was buoyed by the possibility that the Organization of Petroleum Exporting Countries would agree with non-OPEC members to extend the cuts for a longer period than was agreed in April.

Oil analysts expect OPEC to fast track a “virtual” meeting to formally agree to maintaining cuts at the record 9.7 million barrels a day level. The meeting was scheduled for June 9, but bringing it forward would allow producers more time to set pricing levels.

Opinion

This section contains relevant reference points, placed in (Opinion field)

An official with one OPEC delegation told Arab News there was consensus among the 23 OPEC+ members for the new date, which could be as early as June 4. The meeting will also consider how long the current level of cuts would be maintained. Some OPEC members want it to run to the end of the year, other producers would prefer a two-month extension.

Omar Najia, global head of derivatives with trader BB Energy, told a forum run by Gulf Intelligence consultancy: “I’d be amazed if OPEC did not extend the higher level of cuts. As long as Saudi Arabia and Russia continue saying nice things to each other I’d expect the rally to continue.”

A Moscow source close to the oil industry said energy officials there had come to the conclusion that “the deal is working” and it was important to keep prices at an “acceptable” level.

Sentiment was also affected by a comparatively high level of compliance with the new cuts, running at about 75 percent among OPEC+ members, with only Iraq and Nigeria noticeable under-compliers.

Robin Mills, chief executive of Qamar Energy, said: “That’s where I’d expect it to be after two months in such a fluid situation. It will be even better in June.”