The International Monetary Fund reached a three-year funding deal with Egypt on Thursday, which is set to support the government's economic reform program and improve the functioning of the foreign exchange markets.

The $12 billion agreement is subject to approval by the IMF's Executive Board.

Egypt is a strong country with great potential but it has some problems that need to be fixed urgently, the lender said.

The IMF said the program aims to improve the functioning of the forex markets and bring down the budget deficit and government debt.

It will also raise growth and create jobs, especially for women and young people and strengthen the social safety net to protect the vulnerable during the process of adjustment, the lender said.

Financial sector policies will be geared toward safeguarding the strength and stability of the banking system, Chris Jarvis, who led an IMF mission to Cairo said - RTT.