Egyptian Prime Minister Mostafa Madbouly has announced that the International Monetary Fund’s (IMF) fourth review of Egypt’s loan program is set for Tuesday. This announcement was made during a press conference on Sunday, which was attended by IMF Managing Director Kristalina Georgieva. On the same day, Georgieva held a meeting with Egypt’s President Abdel Fattah Elsisi.
Strengthening partnerships
In a tweet on X, Georgieva expressed her sentiments, stating, “Honored to meet with Egypt’s President Alsisi to discuss our strong partnership in advancing the Egyptian economy. Together, we are committed to improving lives and building a brighter future for all Egyptians.”
Economic challenges and job creation
Georgieva highlighted that Egypt’s inflation rate soared to 37 percent in 2023 but has since decreased to between 25 percent and 26 percent. She pointed out that the nation is creating more job opportunities through the private sector and emphasized that the IMF is dedicated to supporting the prosperity of this sector in order to generate sufficient job opportunities for the more than one million young individuals entering the labor market each year. Furthermore, she projected that GDP growth will reach 4.2 percent in FY2025.
Commitment to reforms
In another tweet, she remarked, “I recognize the efforts of the government and the Egyptian people to pursue reforms that are not easy, but are necessary for a strong economy. I have full confidence you will see the benefits of these reforms in a more dynamic, more prosperous Egypt.”
Constructive discussions with leadership
Georgieva also referred to her meeting with Prime Minister Mostafa Madbouly and his economic team, describing it as “very constructive” as they discussed the reform agenda and priorities aimed at building a more inclusive economy and unlocking Egypt’s significant potential.
Engaging with entrepreneurs
Additionally, Georgieva met with a group of entrepreneurs in Egypt. In a tweet, she shared her enthusiasm: “So inspired meeting with dynamic entrepreneurs in Egypt! It is essential to create more opportunities for young people. By investing in technology, health, education and strengthening the private sector, we can equip the next generation for a brighter future.”
Updates on financial support package
In August 2024, the IMF announced that it had relaxed several conditions of its $8 billion financial support package to Egypt, including granting the country additional time to implement necessary reforms. This was part of the IMF’s third review of the financial support package. The fund reported that Egypt met half of the structural benchmarks for this review, while other requirements were not fulfilled. Consequently, IMF staff proposed to rephase two structural benchmarks, modify one, and not reset two.
Compliance with financial regulations
The authorities have maintained a flexible exchange rate regime and a liberalized foreign exchange system, enacted the executive regulations of the Unified Public Finance Law, published detailed reports on tax expenditures and government procurement contracts, and introduced a fixed rate with full allotment for the CBE’s seven-day deposit operations.
Structural benchmark deadline extensions
However, Egypt did not ensure the timely publication of the Central Auditing Organization’s (CAO) annual audit reports on fiscal accounts by the end of March 2024, which is a binding requirement. As a result, the IMF extended the deadline until the end of November 2024, as the authorities are currently amending the law governing the CAO and plan to incorporate this requirement into the law rather than through a decree.
Additionally, the IMF extended the deadline for preparing a recapitalization plan for the Central Bank of Egypt until the end of August 2024. Although authorities have prepared an initial estimate of the central bank’s recapitalization needs, they require more time to refine this estimate and strategize for an effective recapitalization.
Moreover, the IMF modified the quarterly implementation of the retail fuel price indexation mechanism for Egypt, replacing it with a firm commitment to restore fuel prices to cost recovery levels by December 2025.
IMF’s completed requirements
The IMF did not reset the deadline for creating a plan to reduce CBE claims on public sector agencies (excluding the Ministry of Finance), as Egypt has already committed to reducing these claims by EGP 150 billion by the end of July 2024, with an additional reduction of EGP 100 billion every fiscal year until the claims reach zero.
Furthermore, the fund did not reset the deadline for preparing a plan to address the arrears of the Egyptian General Petroleum Corporation (EGPC), as the authorities have outlined a strategy for repayment. Egypt is also implementing measures to increase the corporation’s revenues by gradually raising energy prices. However, the IMF has indicated that it will consider imposing stronger conditions to improve EGPC’s financial situation in the future if Egypt’s current plan does not meet expectations.
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