IMF working with Egypt to bring inflation under control: Lagarde

CAIRO – 6 April 2017: The International Monetary Fund (IMF) is working with Egyptian authorities to bring inflation under control after recording a 30-year high on the back of implementing economic reforms in November, it said in a Thursday statement.

“We recognize the sacrifices made and the difficulties faced by many Egyptian citizens, especially due to high inflation,” IMF Managing Director Christine Lagarde said in a statement issued following her meeting with Egypt’s President Abdel Fatah al-Sisi in Washington late Wednesday.

Inflation has accelerated in Egypt since November on the back of a set of painful reforms including floating the local currency, introducing a value-added tax and slashing energy subsidies. These reforms were necessary for Cairo to seal a $12 billion deal with the IMF to support Egypt's economic reform program over three years.

Egypt's annual urban consumer inflation jumped to 30.2 percent in February from 28.1 percent in January, the highest in 30 years, while the monthly rate of overall price gains eased to 2.6 percent in February from 4.1 percent in January, according to state statistics body CAPMAS.

“The IMF is working to help the government and the Central Bank bring inflation under control and supports the steps the Egyptian authorities are taking to protect its poorest and most vulnerable citizens,” Lagarde added.

Largarde and President Sisi discussed the progress of Egypt’s economic reform program, supported by the fund. “Egypt is implementing a strong economic reform program to help the economy return to its full potential, achieve more growth and create more jobs,” she said.

Sisi emphasized Egypt’s commitment to continuing the economic reform program, praising the “people’s patience and understating of the economic procedures despite the hardship,” according to a presidential statement.

The president also stressed that Egypt is working on improving the business environment and luring more foreign investments with the aim boosting economic growth, reducing unemployment and the public debt.

The government is expected to apply further reforms in the coming months, which may include an additional fuel subsidy cut and an increase of electricity prices. “An IMF mission will visit Cairo to conduct the first review of the economic program during the last week of April for about two weeks; exact dates to be announced closer to the visit,” IMF spokesperson for the Middle East Randa El-Naggar told Egypt Today in March.