COVID-19, lower oil prices to impact Egyptian economy, Middle East region: IMF

Hagar Omran
3 Min Read

The Coronavirus disease (COVID-19) outbreak in addition to lower oil and commodity prices along with lower demand and disruptions in global value chains will impact the Egyptian economy and the Middle East region (ME), said the International Monetary Fund (IMF) Mission Chief for Egypt, Uma Ramakrishnan.

The extent of the outbreak in Egypt and the broader region is still unknown, yet a drop in tourism and transportation are expected to impact ME economies, Ramakrishnan told Daily News Egypt.

The IMF stands ready to provide assistance to member countries facing immediate financing needs arising from public health disasters, according to its website. The IMF has four forms of support and instruments in its toolkit to help countries respond to COVID-19 economic impact.

The first form is the emergency financing which includes the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI) and provides emergency financial assistance to member countries without the need of a full-fledged programme in place.

These loans, which could amount to $50bn for low-income and emerging markets, can be disbursed very quickly to assist member countries to  implement policies that address emergencies such as the coronavirus pandemic.

Emergency lending to low-income countries available through the RCF stands at about $10bn, and $40bn for emerging markets. In 2016, the IMF provided an RFI emergency loan to Ecuador after one of the strongest earthquakes in decades.

The second form of support is augmenting existing lending programmes, which means that the IMF can modify needed existing programmes  to accommodate emerging and urgent needs arising from the coronavirus. The third form of support comes as grants for debt relief for the poorest and most vulnerable countries to help address disasters, including public health disasters as used by Guinea, Liberia, and Sierra Leone during the 2014 Ebola outbreak.

The fourth form of support is offering new financing arrangements, meaning that the IMF can provide support through a new financing arrangement under its existing facilities such as Stand-By Arrangements. However, it is generally more preferable to use the previously mentioned tools since they can be more quickly disbursed.

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