IMF com­pletes Egypt’s sec­ond re­view mis­sion, agrees to dis­burse­ment of $2bn in­stall­ment


The Daily News Egypt - - Front Page - By Mo­hamed Samir

The In­ter­na­tional Mon­e­tary Fund (IMF) del­e­ga­tion has reached an agree­ment on the sec­ond $2b tranche dis­burse­ment of the $12bn loan, bring­ing to­tal dis­burse­ments un­der the pro­gramme to $6bn. The agree­ment came af­ter their sec­ond re­view of Egypt’s eco­nomic re­form pro­gramme dur­ing the del­e­ga­tion’s visit to Cairo.

The agree­ment is yet sub­ject to ap­proval by the IMF’s Ex­ec­u­tive Board, ac­cord­ing to an IMF press state­ment on Fri­day.

“The staff-level agree­ment on the sec­ond re­view reaf­firms the au­thor­i­ties’ com­mit­ment to their re­form pro­gramme sup­ported by the IMF. Egypt’s econ­omy con­tin­ues to per­form strongly, and re­forms that have already been im­ple­mented are be­gin­ning to pay off in terms of macroe­co­nomic sta­bil­i­sa­tion and the re­turn of con­fi­dence,” said Su­bir Lall, head of the IMF del­e­ga­tion.

Fur­ther­more, Egypt’s GDP growth increased to ac­count for 4.2% dur­ing fis­cal year (FY) 2016/17, com­pared to the 3.5% fore­cast, the state­ment in­di­cates. On the other hand, ac­count deficit de­clined in dol­lar terms, sup­ported by the in­crease in non-oil ex­ports and tourism re­ceipts.

Mean­while, port­fo­lio in­vest­ments in Egypt reached $16bn, and foreign di­rect in­vest­ment (FDI) increased by 13%.Yet, head­line in­fla­tion has peaked in July and has been on a de­clin­ing path since then, sup­ported by the Cen­tral Bank of Egypt’s (CBE) mon­e­tary pol­icy stance.

Egypt adopted its eco­nomic re­form pro­gramme in 2016, which in­cluded cur­rency flota­tion, re­sult­ing in the pound los­ing about 50% of its value, im­ple­ment­ing the VAT, and re­duc­ing en­ergy sub­si­dies, which caused in­fla­tion to reach a his­tor­i­cal sky-rocket high level of over 33% in July.

Ac­cord­ing to the state­ment, bud­get per­for­mance was in line with pro­jec­tions with a pri­mary deficit of 1.8% of GDP, while the over­all deficit ex­ceeded pro­jec­tions by 0.4% of GDP to reg­is­ter at 10.9% of GDP.

“The CBE re­mains com­mit­ted to achiev­ing its goal of reign­ing in in­fla­tion, which is expected to de­cline to about 13 per­cent in the quar­ter end­ing De­cem­ber of 2018. Its mon­e­tary pol­icy frame­work is un­der­pinned by a flex­i­ble ex­change rate regime, which has elim­i­nated chronic foreign ex­change short­ages and the par­al­lel mar­ket,” said Lall.

More­over, the state­ment praised the gov­ern­ment’s com­pre­hen­sive and am­bi­tious agenda of struc­tural re­forms aim­ing to cre­ate jobs to meet the rapidly grow­ing pop­u­la­tion, through in­creas­ing pri­vate sec­tor-led in­vest­ment, pro­duc­tiv­ity growth, and en­hanced com­pe­ti­tion.

The In­ter­na­tional Mon­e­tary Fund (IMF)

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