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Cairo, Egypt.

Earlier this month, the country floated its pound amid an acute hard currency shortage, double-digit inflation and ahead of a meeting of the IMF board of directors to consider the loan.

Announcing the board’s decision to approve the loan last week, IMF managing director Christine Lagarde said the liberalisation of the exchange rate, and devaluation of the pound, were “critical steps to restoring confidence in the economy”.

“The Egyptian authorities have developed a home grown economic programme to address longstanding challenges in the Egyptian economy,” she continued.

“The authorities recognise that resolute implementation of the policy package under the economic programme is essential to restore investor confidence, reduce inflation to single digits, rebuild international reserves, strengthen public finances and encourage private sector-led growth.”

The programme includes measures to considerably reduce the country’s deficit and public debt, including through the introduction of a VAT, the reduction of energy subsidies, and the optimising the public sector wage bill.

Reforms to address “deep-seated” impediments to growth and job creation will also be critical, the fund said, with the main areas targeted being business licensing and insolvency frameworks, public financial management and state-owned enterprises, and labour market reforms.