The International Monetary Fund staff team and the Egyptian authorities have reached a staff-level agreement on the first review of Egypt’s economic reform programme, supported by the IMF’s $12 billion loan, according to a Fund statement on Friday.
The statement by the head of the IMF delegation to Egypt, Chis Jarvis, said that once approved by the Fund’s executive board, “completion of the review would make available SDR 895.48 million (about $1.25 billion), bringing total disbursements under the program to about $4 billion.”
The delegation from the IMF arrived in Cairo on 30 April to follow up on the progress in the country's economic reform programme, ahead of delivering the second tranche of the IMF loan.
The visit lasted until 11 May and included meetings with officials from the Central Bank of Egypt and the finance ministry to discuss plans for the second phase of the country's reform programme, including the 2017-2018 state budget, and structural reforms adopted by the government.
“The Ministry of Finance has drafted a very strong budget. If enacted by Parliament, it will place public debt on a clearly declining path to sustainable levels. We welcome in particular the plans to raise the VAT rate, and to continue the process of reforming energy subsidies over the three years, of the program," the statement reads
Jarvis and his team also welcomed "the very good progress made on structural reforms, especially Parliament’s approval of the new industrial licensing and investment laws. Both acts will help unlock Egypt's growth potential, attract investors, increase exports and industrial production, as well as create adequate and well-paid jobs to absorb the rapidly growing labor force."
The efforts made by the government and the Central Bank of Egypt to "reform the economy," such as the liberalisation of the exchange rate, the introduction of a value-added tax, and energy subsidy reform, have all had significant effects, the statement reads.
The statement also referred to others steps made by the Egyptian government, giving examples of the foreign exchange shortages that have been resolved and interbank market activity that is recovering, leading to Egypt regaining investors’ confidence.
"The manufacturing sector--key for job creation--is witnessing a strong rebound and exports have increased significantly. Meanwhile, Egypt’s GDP growth reached 3.9 percent in the first quarter of 2017 and primary fiscal deficit has fallen by about 2 percent of GDP," the statement added.
The IMF also pointed to the Egyptian authorities’ attempt to reduce inflation as a key priority for safeguarding the welfare of people across Egypt, while they expressed their pleasure with "the strengthened social protection measures in the program."