São Paulo – The International Monetary Fund (IMF) should make available another USD 2 billion to Egypt, within the arrangement signed with the Arab country two years ago for the implementation of an economic reform program, the Fund reported. The total sum of the arrangement is USD 12 billion, and with this new disbursement, the total made available until now reaches USD 10 billion. In the picture, Egypt’s president, Abdel Fattah Al-Sisi.
The disbursement of the USD 2 billion is a recommendation of IMF’s staff that visited the Arab country between October 18 to 31, led by the Assistant Director of IMF’s Middle East and Central Asia Department Subir Lall, in the reforms program’s fourth review. The disbursement recommendation is subject to approval by the IMF’s Executive Board.
In a report on the visit, the Fund stated that due to the authorities’ strong implementation of the reform program, Egypt’s Gross Domestic Product (GDP) growth accelerated from 4.2% in the fiscal year of 2016/2017 to 5.3% in the 2017/2018 period. “The Egyptian economy has continued to perform well, despite less favorable global conditions,” said Lall in a statement.
The current account deficit narrowed from 5.6% to 2.4% of the GDP in the same comparison, boosted by strong remittances and a recovery in tourism. Gross general government deficit declined from 103% of the GDP to 93%, also in the same comparison, supported by fiscal consolidation and higher growth, according to the Fund.
“The Central Bank of Egypt’s (CBE) prudent monetary policy helped bring down annual inflation from 33% in July 2017 to 11.4% in May 2018. However, inflation increased again to about 16% in September 2018, “said Lall. According to the Assistant Director, inflation increased due to food and energy prices, but the Central Bank should be able to bring it down to at least a single digit in the medium term.
The IMF believes that the Central Bank’s commitment to a flexible exchange rate policy will help enhance competitivity, protect the country’s foreign reserves and cushion against external shocks. “Egypt’s banking system remains liquid, profitable, and well capitalized,” said Lall. The fiscal policy should continue to keep debt on a declining path.
Translated by Sérgio Kakitani