The IMF has approved Egypt’s fourth review under the EFF arrangement, enabling a draw of US$1.2 billion and a total access of US$3.2 billion. Despite regional challenges, Egypt preserved macroeconomic stability with improved fiscal measures. Continued reforms are necessary to foster growth and resilience amidst external shocks, including management of debt and prioritizing structural changes.
The International Monetary Fund (IMF) has finalized Egypt’s fourth review under its Extended Fund Facility (EFF) arrangement, facilitating an immediate draw of approximately US$1.2 billion. This brings Egypt’s total access under the EFF to around US$3.2 billion since its approval on December 16, 2022. The Executive Board also endorsed a new arrangement for the Resilience and Sustainability Facility (RSF), allowing access to about US$1.3 billion.
Despite external challenges, including regional tensions impacting Suez Canal revenues, Egypt has maintained macroeconomic stability. Economic growth slowed to 2.4 percent in FY2023/24; however, it rebounded to approximately 3.5 percent in the first quarter of FY2024/25. The current account deficit increased to 5.4 percent of GDP, although a primary fiscal balance improvement was noted due to stringent expenditure controls.
The IMF acknowledged the need for decisive reforms to foster sustainable growth, including enhancing domestic revenue, improving the business environment, and promoting governance. The Egyptian government’s commitment to fiscal discipline, even amid challenging conditions, is imperative for achieving future fiscal targets.
The organization also pointed to the need for a medium-term fiscal strategy to navigate high debt and ensure sustainability. Enhanced transparency and effective tax mobilization are crucial for future resilience, alongside a flexible exchange rate regime to adapt to economic shocks.
Implementing structural reforms has been inconsistent, particularly regarding divestment. However, new steps are being taken to increase competition and improve governance, particularly in the banking sector. There are also efforts to align macro-critical reforms with climate objectives through the RSF.
At the conclusion of discussions, Mr. Nigel Clarke, Deputy Managing Director of the IMF, emphasized the importance of further economic stabilization measures, which would not only spur growth but also enhance Egypt’s resilience against external shocks. Directors of the Executive Board underlined the necessity of increased vigilance and commitment to structural reforms to support inclusive growth.
In summary, the IMF’s review and subsequent funding approval reflect Egypt’s ongoing economic stabilization efforts amidst significant external challenges. While macroeconomic stability has been largely preserved, achieving robust growth and fiscal sustainability requires careful implementation of necessary reforms and steadfast governance measures. The focus on enhancing competition and addressing climate change alongside economic resilience is crucial for long-term improvement in Egypt’s economic outlook.
Original Source: www.miragenews.com
