The news in a nutshell
Two months after Egypt received the first $2.75-billion tranche of a threeyear, $12-billion international financing package, the details of a loan agreement with the International Monetary Fund were revealed to the public on Jan. 18. On the fiscal side, government debt is expected to decline to around 88 percent of GDP in 2018/19, compared to 98 percent in 2015/16. Meanwhile, the current account deficit is expected to narrow to 3 percent of GDP by 2018/19, and the overall deficit to 4.7 percent of GDP, according to a review compiled by Bloomberg. These figures will be achieved via increased revenue (in addition to the new value-added tax, the documents call for a capital-gains tax to be reinstated as of May), as well as cost savings from cutting fuel subsidies, keeping wage bill increases below inflation levels and developing a pension reform plan. The IMF has not recommended cuts to food subsidies, and the program developed with the Egyptian government includes
social protection measures such as the expansion of the Takaful and Karama programs to reach 1.7 million households and 7.3 million beneficiaries. In a briefing following the document release, IMF Mission Chief for Egypt Chris Jarvis said he expected to see “significant falls in inflation” by the second half of 2017. The next tranche of the loan is expected in the spring, following an assessment visit by the IMF. “All being well,” he said he expected the funds to be released in late April.