IMF said Egypt’s reform programme has helped accelerate growth, reduce inflation and unemployment, and narrow external and fiscal deficits
The International Monetary Fund (IMF) said that Egypt should maintain a tight monetary policy to contain the risk of inflation as a result of fuel and electricity subsidy cuts, in a statement that praised progress on reforms tied to a new $2 billion loan.
In a statement, the IMF said Egypt’s healthy level of foreign reserves and the flexible exchange rate will help manage any volatility acceleration in capital flows outflows, should the recent tightening of global financial conditions lead investors to pull back from emerging markets.
The IMF’s remark comes days after Egypt’s central bank decided to keep interest rates steady, citing inflationary risks, and after the IMF executive board announced Egypt had made sufficient progress on economic reforms to receive its next loan disbursal.
Egypt kicked off its three-year $12 billion loan programme in late 2016, agreeing to tough reforms resulting in deep cuts to energy subsidies, new taxes, and a floated currency in a bid to draw back investors who fled after its 2011 uprising.
David Lipton, IMF First Deputy Managing Director said strong programme implementation and generally positive performance has been instrumental in achieving macroeconomic stabilisation.
The economic situation has continued to improve during 2018 and IMF commended Egyptian authorities’ fiscal consolidation plan for remaining on track and the organisation assumes this year’s surplus target appears likely to be met.
Egypt’s strong programme implementation and generally positive performance has been instrumental in achieving macroeconomic stabilisation, with external and fiscal deficits narrowing, and growth accelerating.
IMF sees a positive outlook for Egypt as the country is undergoing a recovery in tourism and rising natural gas production.
The current account deficit is expected to remain below three per cent of GDP and the public debt ratio to decline markedly by 2023.