December 20, 2016 / 9:49 PM / 2 years ago

UPDATE 1-World Bank approves second $1 bln loan tranche to Egypt

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CAIRO, Dec 20 (Reuters) - The World Bank’s board of executive directors approved on Tuesday a second $1 billion disbursement from a $3 billion loan to Egypt to support its economic reform programme.

Egypt has been negotiating billions of dollars in aid from various lenders to help revive an economy hit by political upheaval since a 2011 revolt and to ease a dollar shortage that has crippled imports and hampered its recovery.

“We are pleased to continue supporting the country’s ambitious program of reforms with a strong focus on job creation and boosting the competitiveness of Egyptian businesses,” said Asad Alam, World Bank country director for Egypt, Yemen and Djibouti.

The World Bank told Reuters last year the first tranche of the loan was focused on “10 prior actions for policy and institutional reforms” already implemented. The second and third tranches are linked to additional reforms the government plans.

Facing a gaping budget deficit, Egypt began a series of painful economic reforms and has been taking steps to lower fuel subsidies, introduce a new value-added tax (VAT) and free-float its currency to attract foreign inflows.

Last month the International Monetary Fund approved a three-year $12 billion loan to support Egypt’s economic reforms. It has disbursed an initial tranche of $2.75 billion and said the rest will be phased in over the duration of the programme.

On Dec. 13 the board of the African Development Bank also approved the payment of a $500 million loan to Egypt, its second of three expected disbursals. (Reporting by Lin Noueihed; Writing by Asma Alsharif; Editing by Gareth Jones)

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