IMF completes 2nd, final review of Egypt’s economic program allowing authorities to draw $1.7B

CAIRO – 23 June 2021: The Executive Board of the International Monetary Fund (IMF) completed, Wednesday second, final review of Egypt’s economic reform program allowing the authorities to draw about $ 1.7billion.

The decision brings total purchases to $ 5.4 billion or 184.8 percent of quota, according to IMF statement.

It was added that Egypt responded to the COVID-19 crisis with timely and prudent fiscal and monetary easing, which helped mitigate the health and social impact while safeguarding economic stability, debt sustainability, and investor confidence.

Egypt’s Economic growth is expected to reach 2.8 percent in FY2020/21 and rebound strongly to 5.2 percent in FY2021/22, but the outlook remains clouded by uncertainty while Egypt remains vulnerable to shocks due to its high public debt and gross financing needs, IMF stated.

The statement added that the authorities’ near-term fiscal and monetary policies aim to support the recovery while continuing to preserve macroeconomic stability. With the immediate crisis subsidizing, deepening and broadening structural reforms will be essential to help unleash Egypt’s enormous growth potential.

“Egypt’s authorities’ structural reform agenda aims at more inclusive and sustainable private sector-led growth to create durable jobs and improve external resilience. This will require sustained efforts to improve resource allocation by reducing the role of the state and enhancing governance, strengthening social protection, improving the business environment, deepening financial markets, and increasing integration into global trade. The IMF will remain closely engaged with the Egyptian authorities and continue supporting their reform agenda.” IMF said.

IMF Deputy Managing Director and Acting Chair Antoinette Sayeh said in statements that the Central Bank of Egypt’s (CBE) data driven approach to monetary policy has helped anchor inflation expectations. Inflation remains below the CBE’s target range.

“The banking system remains resilient, having entered the crisis well-capitalized and with ample liquidity. As crisis-related measures are unwound, continued supervisory vigilance will be needed to closely monitor lending standards.” Sayeh added.

She noted that the authorities’ national structural reform plan aims to achieve strong private sector-led growth to create durable employment and improve external resilience. “This will require sustained efforts to improve resource allocation by reducing the role of the state in the economy, enhancing governance and transparency, improving the business environment, deepening financial markets, and increasing integration into global trade.” Sayeh said.