12/11/2017 06:41 AST
Egypt government has reached a staff-level agreement with the International Monetary Fund (IMF) for an installment of about $2 billion more from a three-year, $12 billion loan programme to push through its ambitious economic reforms under the loan deal.
The deal is subject to approval by the IMF’s executive board and the completion of the review would make available SDR1.4 billion (about $2 billion), bringing total disbursements under the program to about $6 billion.
SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves. Its currency value is determined by summing the values in US dollars, based on market exchange rates, of a basket of major currencies including euro, Japanese yen, pound sterling and the Chinese renminbi).
According to IMF, the staff-level agreement on the second review reaffirms the authorities’ commitment to their reform program.
Egypt’s economy continues to perform strongly, and reforms that have already been implemented are beginning to pay off in terms of macroeconomic stabilization and the return of confidence, it stated.
While the reform process has required sacrifices in the short term, seizing the current moment of opportunity to transform Egypt into a dynamic, modern, and fast-growing economy will improve the living standards and increase prosperity for all Egyptians, said senior government officials after the signing ceremony.
"Egypt’s growth picked up during fiscal year 2016/17, with GDP rising by 4.2 per cent compared to the projected 3.5 per cent. Meanwhile, the current account deficit narrowed in dollar terms, supported by the increase in non-oil exports and tourism receipts while non-oil imports declined," they stated.
Reflecting increased investor confidence, portfolio investments into Egypt reached $16 billion this year and foreign direct investment rose by 13 per cent. Headline inflation appears to have peaked in July and has been declining since then, supported by the Central Bank of Egypt’s (CBE) prudent monetary policy stance, they added.
The budget performance was broadly in line with program projections with a primary deficit of 1.8 per cent of GDP. However, the overall deficit exceeded projections by 0.4 per cent of GDP and reached 10.9 per cent of GDP, mainly on account of higher than expected interest payments.
Reflecting the overall strong policy framework and credibility of the authorities’ program, foreign exchange reserves increased significantly to record levels.
The IMF said the government’s aim for a primary surplus in the current fiscal year will help Egypt achieve its key objective of putting government debt on a firmly downward trajectory over the medium term.
Reducing unemployment, specifically among Egypt’s youth, and integrating more women into the labour force are key to Egypt’s economic liftoff and are the strongest and most sustainable form of social protection, said the statement from the monetary organisation.
The IMF strongly welcomes the authorities’ commitment to continue its efforts to expand childcare services to promote women participation in the labour market, it added.-
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