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IMF approves USD 1.7 billion financing for Egypt’s economy

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Pressures of public debt and gross financing persist, but fiscal and monetary policies have shored up Egypt’s economy for now.

The International Monetary Fund (IMF) has completed its second review of the reform program for Egypt’s economy, and has subsequently allowed a financing of SDR 1.158 billion, or USD 1.7 billion. The financing is supported by a 12-month Stand-By Arrangement (SBA). With the announcement, the total funding provided under the SBA has now reached USD 5.4 billion, 184.8% of quota.

The Executive Board of the IMF also concluded consultations under Article IV of the IMF's Articles of Agreement on Egypt’s economy. The IMF conducts bilateral discussions with member states on national economic development and policies under Article IV. The next consultation is likely to take place next year. 

Commending Egypt’s efforts in managing balance of payments needs and macroeconomic stability due to the pandemic, the IMF noted that reforms since 2016 allowed the country to build sizable reserves to support it during the pandemic.

IMF: EGYPT'S ECONOMY EXPECTED TO ACHIEVE 5.2% GROWTH NEXT YEAR

For the financial year ended 2021, the IMF anticipates that Egypt’s economy will reach 2.8% in growth, and 5.2% for the year ended 2022, boosted by fiscal and monetary policies. At the same time, high public debt levels and gross financing needs still bring a degree of economic uncertainty to the long-term outlook for Egypt’s economy.

Meanwhile, real estate in Egypt is expected to become the largest contributor to the country’s GDP in the next 15 years, bolstered by the National Investment Law, Vision 2030, and an increased urbanisation drive in the country.

According to a JLL report, Egypt’s real estate sector emerged as a success story for the MENA region this year, despite the challenges of the pandemic. Structural reforms and a flexible approach were able to help the country absorb the shocks of the pandemic to Egypt’s economy, while propping up its real estate sector.

Going forward, achieving growth potential would entail deep and broad structural reforms, and inclusive sustainable private sector partnerships, the IMF said, pointing to a need for better governance, stronger social protection, improved business environment, deepened financial markets, and greater integration with global trade.

“The budget target for FY2021/22 strikes an appropriate balance between supporting the recovery and keeping public debt on the projected path. The envisaged pickup in growth should allow a return to the pre-crisis primary surplus from FY2022/23 to put public debt back on a firmly downward trajectory,” Antoinette Sayeh, Deputy Managing Director and Acting Chair at the IMF, said.

 

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