IMF Approves $12 Billion Loan
The International Monetary Fund's executive board on Friday approved Egypt's request for a $12 billion loan facility, after the North African country met its requirements to implement tough measures to revive its floundering economy.
The first tranche of $2.75 billion can be disbursed immediately and will be added to the cash-strapped country's international reserves, the IMF said. The bailout "will help Egypt restore macroeconomic stability and promote inclusive growth," the fund said. Egypt in recent months has secured additional financing worth billions of dollars, floated its tightly managed currency and cut fuel subsidies, efforts that received strong support from IMFManaging Director Christine Lagarde.
The country late last week floated the Egyptian pound and allowed it to substantially weaken against the U.S. dollar, while also raising the price of fuel. These moves are expected to increase the cost of living for ordinary people in the Arab world's most populous country. But Egypt has little choice. It needs the IMF cash to help revive an economy struggling to recover from years of political unrest and a recent spate of terrorist attacks, which have hurt its two biggest foreign cash earners -- tourism and foreign direct investments.
Ms. Lagarde earlier this week said she would recommend that the board approve Egypt's request for financial assistance in support of its ambitious economic reform program that would help restore macroeconomic stability.
Egypt's foreign reserves fell by more than half to about $16 billion earlier this year from pre-2011 levels. Recent aid and loans helped boostthose reserves to $19 billion at the end of October, data from the country's central bank showed.
As cash reserves depleted, Egypt rationed its dollars to pay for essentials such as wheat and medicines, forcing businesses to turn to the black market to fulfill their foreign-currency requirements.
With the IMF funds and aid from other countries and agencies -- the central bank on Thursday said it has secured $2 billion in financing from international banks -- Egypt would be able to meet some of that market requirement for dollars and ease the pressure on its currency.
The Egyptian pound traded at about 16.20 per U.S. dollar Thursday, according to several local banks, compared with a rate of about 8.88 per dollar that the central bank had maintained since March. That has also narrowed the gap between the official exchange rate and the black market.
A weaker currency will also improve Egypt's external competitiveness, support exports and tourism and help attract foreign investment, the IMF has said.
Egyptian stocks closed 4.5% higher Thursday, extending gains since last week's announcements on expectations that the currency float and other measures will likely help the country secure the much needed IMF loan.
Government Seeks U.S. Refugee Deal
Donald Trump's election as the new American leaderhas given fresh urgency to Australia's pursuit of a deal to send as many as 1,800 refugees to the U.S. Defense Industry Minister Christopher Pyne said Friday there was time to conclude a deal with the Obama administration before Mr. Trump takes office in January. The Republican president-elect has taken a hard line on immigration, threatening to block Muslims from entering the U.S. and to build a wall along the Mexican border.
The government hopes an agreement with the U.S. would allow it to close contentious immigration detention camps on the Pacific island of Nauru and Papua New Guinea's Manus island that critics have called Australia's "Guantanamo Bay." Most of the refugees in the camps come from Afghanistan, Pakistan, Iraq, Iran, and Sri Lanka.
Negotiations became more urgent in April when Papua New Guinea's highest court ordered the closure of Manus, ruling that hundreds of asylum seekers were being held illegally on Australia's behalf.
But Australia has refused to take any of the detainees under a tough border blockade policy aimed at deterring people smuggling, declaring no asylum seeker who arrived since the start of the policy would ever be allowed to settle in the country.
Mr. Turnbull said during a U.S. visit in September that talks were under way with the Obama administration for Australia to resettle people from U.S.-backed camps in Costa Rica who had fled Central American violence in an exchange for Australia's Pacific islandrefugees. The Obama administration hasn't commented on any talks. The deal would allow both countries to clear costly refugee centers in third countries, say refugee advocacy groups.
The Australian newspaper reported on Friday that a deal could be announced as soon as this weekend. One Australian immigration department official said both the U.S. and Canada were involved in the talks with Canberra.
Mr. Turnbull declined to comment on the report, citing its speculative nature. Both Australia's government and U.S. diplomats in Australia declined to comment on the report. The head of Australia's Immigration Department, Michael Pezzullo, declined to answer questions about any refugee deal with the U.S. at a Friday appearance before Australian lawmakers.
Australia has faced international criticism of its hard-line efforts to deter illegal migration, including blockading vessels. The United Nations and rights groups have repeatedly condemned conditions in the Pacific camps, including alleged instances of sexual abuse.
Australia's Foreign Minister Julie Bishop told Australia's Parliament this week that the government's tough approach -- soon to be strengthened with a lifetime ban on asylum seekers obtaining any visa -- had "restored integrity and credibility back into our border protection."
But in a break with years of bipartisan support for tough immigration laws, the country's Labor opposition this week said the new law overreached and promised to vote against it, leaving its status unclear.
(END) Dow Jones Newswires
November 12, 2016 02:47 ET (07:47 GMT)
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