IMF board completes first review under Stand-By Arrangement for Egypt

WASHINGTON, Dec 19 (MNEA) - The Executive Board of the International Monetary Fund (IMF) completed on Saturday the first review of Egypt’s economic reform program supported by a 12-month Stand-By Arrangement (SBA), allowing the authorities to draw about US$1.67 billion, bringing total disbursements under the SBA to about US$3.6 billion.

The 12-month SBA in the amount about US$5.2 billion was approved by the Executive Board on June 26, 2020 to support the authorities’ economic reform program during the COVID-19 crisis.

Deputy Managing Director and Acting Chair, Antoinette Sayeh said in a statement that Egypt has managed well the COVID-19 pandemic and the related disruption to economic activity by adopting proactive measures to address health and social needs and support the sectors most directly affected by the crisis.

However, there are still risks to the outlook, particularly as a second wave of the pandemic increases uncertainty about the pace of the domestic and global recovery, she said.

Sustained progress on structural and governance reforms is essential to foster higher, greener, and more inclusive private-sector-led growth, including continued focus on enhancing the transparency of state-owned enterprises, ensuring a level playing field for all economic agents, and removing bureaucratic obstacles to private sector development, she added.

“The Egyptian authorities have managed well the COVID-19 pandemic and the related disruption to economic activity. The proactive measures taken to address health and social needs and to support the sectors most directly affected by the crisis have helped mitigate the economic and human impact. The growth slowdown has so far been less severe than expected with Egypt expected to be among the few countries with positive growth rate this year. External market conditions have also improved with a strong return of portfolio inflows," she said.

“There are still risks to the outlook particularly as a second wave of the pandemic increases uncertainty about the pace of the domestic and global recovery. The high level of public debt and gross financing needs also leave Egypt vulnerable to volatility in global financial conditions. Continued strong policy implementation will further strengthen resilience and help maintain investor confidence" she added.

She went on to say “The government’s structural reform agenda is appropriately ambitious. Sustained progress on structural and governance reforms is essential to foster higher, greener, and more inclusive private-sector-led growth. The government’s ongoing initiatives to support a green recovery are welcome. "

"Continued focus is needed on reforms to enhance the transparency of state-owned enterprises and to facilitate trade. Timely finalization of a restructuring plan for the National Investment Bank is important for reducing fiscal risks. Finally, ensuring a level playing field for all economic agents and removing bureaucratic obstacles to private sector development will lead to durable improvements in the investment climate and governance," she added.