Coronavirus: Egyptian economy performing well despite pandemic pressure - IMF

20 Novembre 2020

Cairo, Egypt, November 20 (Infosplusgabon) – Egypt’s economy has performed better than expected despite the COVID-19 pandemic, thanks to a swift, balanced and comprehensive stimulus package, monetary policy response, targeted financial sector initiatives, and a timely financing request from the International Monetary Fund (IMF)’s Rapid Financing Facility and Stand-by Arrangement of nearly US$8 billion.

“Containment measures, supported by the authorities’ effective crisis management, and strong implementation of their policy programne helped mitigate the effects of the crisis,” said a statement issued by the IMF on Friday after the Fund’s team held virtual discussions with Egyptian authorities on recent economic developments and policy priorities.

During a virtual mission from 4-15 November, the IMF team led by Ms. Uma Ramakrishnan, also discussed with the Egyptian authorities the first review for Egypt’s economic programme supported by the Fund’s 12-month Stand-by Arrangement.

At the end of the discussions, Ms. Ramakrishnan issued a statement, affirming that after recording a growth rate of 3.6 percent in Financial Year (FY) 2019/20, growth of the Egyptian economy is projected to reach 2.8 percent in FY2020/21, with a modest recovery in all sectors except tourism, as the pandemic continues to disrupt international travel.

She noted that pandemic-related risks still exist in light of the second global wave of COVID-19 cases while subdued inflation in September (3.7 percent)—primarily reflected lower food prices.

Ms. Ramakrishnan disclosed that the IMF staff team and the Egyptian authorities have reached a staff-level agreement on the first review of the economic programme supported by the Fund’s $5.2 billion Stand-by Arrangement.

This agreement is subject to approval by the IMF’s Executive Board, which will take place in the coming weeks. Upon approval, an additional US$1.6 billion would ill be made available to Egypt, she said.

“The Central Bank of Egypt’s (CBE) monetary policy remains appropriately accommodative. In this regard, we welcome the CBE’s recent interest rate cuts to further support economic recovery amid muted inflation. The exchange rate has modestly appreciated in the wake of an increase in capital inflows. Continued exchange rate flexibility will help absorb external shocks. Egypt's banking system remains liquid, profitable, and well capitalized,” the IMF official said.

“Egypt’s fiscal policy in FY2020/21 remains appropriately focused on supporting the immediate priorities in health, protecting the most vulnerable, and supporting sectors affected by the pandemic, and remains on track to achieve a primary surplus of 0.5 percent of GDP.

“The government’s commitment to returning to a primary surplus of 2 percent of GDP as the economic recovery becomes entrenched will be essential to reduce public debt and support fiscal sustainability. The recent publication of contracts awarded for COVID-19-related spending is a welcome step towards increasing transparency and the team encourages continued updates to these publications,” she added.

FIN/INFOSPLUSGABON/ASQ/GABON2020

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