26 May 2021

IMF officials have reached an agreement with Egypt regarding the completion of the second and final review of the IMF’s one year USD5.2bn Stand-By Arrangement (SBA). Under the agreement, Egypt will receive the third and final tranche of the SBA, amounting to USD1.6bn, pending approval by the IMF’s Executive Board.

After concluding the discussions, the IMF praised Egyptian authorities for their demonstrated commitment to the goals of the IMF’s program. These goals are to maintain macroeconomic stability during the COVID pandemic, while simultaneously implementing structural reforms and maintaining key social and health spending. The IMF stated that the Egyptian economy has shown resilience as authorities managed to alleviate the pandemic’s effect through quick and balanced policies, including reaching out to the IMF for assistance. As evidence of this resilience, the IMF cited Egypt’s net accumulation of international reserves and a primary budget surplus which both exceeded the program’s targets, inflation that was kept in check, as well as exchange rate flexibility in both directions which softens external shocks.

After the discussions, the IMF’s forecast for the Egyptian economy in the short term was that macroeconomic stability will be preserved throughout the economic recovery, supported by appropriate fiscal and monetary policies. These policies include fiscal transparency and governance reforms, social protection, improvements to the business environment, a reduction in debt vulnerability, and clearing more space in the budget for priority spending including higher investments in infrastructure, health, and education. The IMF predicted 2.8% growth in FY20/21, rising to 5.2% in FY21/22. To enhance the recovery, address post-pandemic challenges, and facilitate more growth, the IMF suggested broader structural reforms. (Source: IMF (English) (Arabic), al-Ahram (English) (Arabic), Mubasher, Arab Finance, Amwal al-Ghad, Hapi Journal, al-Arabiya)