The five-year, 1.5 percent interest loan must be approved by the IMF board in July. But the agency praised the draft budget Egyptian officials have drawn up for the country's new fiscal year, which starts July 1.

"Following a revolution and during a challenging period of political transition, the Egyptian authorities have put in place a home-grown economic program with the overarching objective of promoting social justice," said Ratna Sahay, the agency's deputy director for the Middle East, in a statement announcing the deal. "The measures are aimed at supporting economic recovery, generating jobs, and assisting low income households, while maintaining macroeconomic stability."

Egypt's economy shrank by 7 percent as a result of the January revolt, reducing its expected annual growth rate for the just-completed fiscal year to 2 percent. In April, the IMF projected a 1 percent growth rate for the coming year, with unemployment hovering around 9 percent.

Cairo sought IMF assistance in May, indicating it may need as much as US$12 billion in international loans to fund its plans. Its $87 billion draft budget aims to produce "rapid and sustainable employment generation and better living standards" for Egyptians, where more than 40 percent of the population lives in poverty.