Egypt’s proactive policies shielded economy from coronavirus repercussions: IMF – Economy – Business
Egypt has responded to the coronavirus crisis with timely and prudent fiscal monetary easing that has helped mitigate the health and social repercussions of the pandemic, the board of directors of the International Monetary Fund (IMF) said in its review of the Egypt’s reform program which was released on Thursday.
In doing so, Egypt has succeeded in preserving its economic stability, debt sustainability and investor confidence.
The report is the second and final review by the IMF of Egypt’s economic reform program which has been supported by a 12-month Stand-By Arrangement (SBA).
Last month, the IMF announced the completion of Egypt’s $ 5.2 billion SBA loan and the completion of the second and final review of the program, paving the way for the country to receive the third tranche of the loan. of $ 1.6 billion.
The fund praised Egypt’s strong performance under the SBA during the review.
“This is the result of a timely political response to the crisis and consistent program implementation with outperformance in key program objectives,” the statement on the review read.
“The Egyptian authorities have handled the economic and social impact of the COVID-19 pandemic well. Proactive economic policies have shielded the economy from the brunt of the crisis, mitigating the health and social impact of the shock, while maintaining macroeconomic stability and investor confidence, “the statement added.
However, “high public debt and large gross financing needs make Egypt vulnerable to shocks or changes in financial market conditions for emerging markets,” the fund said.
The review praised the fiscal target for fiscal year 2021/22 as Egypt strikes an appropriate balance between supporting the recovery and keeping public debt on track.
“The planned recovery in growth should allow a return to the pre-crisis primary surplus from the 2022/23 financial year to put the public debt on a resolutely downward trajectory,” the statement said.
Continued progress in structural budget reforms is essential to ensure additional space for priority spending on health, education and social protection, he added.
The statement praised the role of the Central Bank of Egypt and how its data-driven approach to monetary policy has helped anchor inflation expectations.
“The banking system remains resilient, having entered the crisis well capitalized and endowed with abundant liquidity.
“The authorities’ national structural reform plan aims to achieve strong private sector-led growth to create sustainable jobs and improve external resilience,” the IMF said in its statement, adding that to achieve these goals will require sustained efforts to improve resource allocation by reducing the role of the state in the economy and improving governance and transparency.
After receiving IMF Executive Board approval in June 2020, Egypt received the first tranche of $ 2 billion as immediate disbursement and the second tranche of $ 1.6 billion in January following approval of the first review of the program.
The main objectives of the program included helping Egypt cope with the challenges posed by the coronavirus by meeting the country’s balance of payments needs, reducing the budget deficit, maintaining the achievements made over the past four years as part of the country’s economic reform program and providing funds for the implementation of Second wave of economic reforms in Egypt.
The SBA loan helped Egypt replenish its international reserves hit hard by the pandemic, falling to $ 36 billion in March, from $ 45.5 billion at the end of February 2020.
In May 2020, Egypt requested another $ 2.7 billion Quick Finance Instrument loan to address the impact of the pandemic. He received the sum all at once.