Egyptian Finance Minister Mohamed Maait. Photo courtesy of Egyptian cabinet Facebook page.
Maait is currently attending the Economic Forum held in Qatar, which kicked off on Tuesday.
In March, Egypt submitted a request to the IMF for a new loan in order to keep the gains of the first wave of the country’s economic reforms and meet the country’s financial needs in response to the global economic challenges amid the ongoing Russia-Ukraine war.
The first wave of reforms (2016-2019) was backed by a $12 billion IMF loan to Egypt under the EFF facility in 2016.
In June 2020, to address the severe impacts of the pandemic on the national economy, Egypt secured two loans from the IMF with a total of about $8 billion.
The discussions on a new loan are still in process, according to Maait.
The EFF is designed to provide assistance to countries experiencing serious payment imbalances because of structural impediments or slow growth and an inherently weak balance-of-payments position.
It also provides support for comprehensive programs including the policies needed to correct structural imbalances over an extended period.
During June, Fitch Solutions expected the loan amount to come to $6.5 billion, while BNP Paribas projected it at $10 billion in May.
Maait also noted that investment in local debt instruments’ outflow is the threefold that of other outflows Egypt has experienced over the past few years, as 90 percent of inflows have exited the Egyptian market ($20 billion) since the beginning of 2022.
Egypt’s government is eyeing raising the primary surplus to 1.5 percent of GDP to reach EGP 132 billion in FY2022/2023, which starts 1 July, and reducing the budget deficit to 6.1 percent of GDP.
In the current FY2021/2022, the primary surplus posted 1.4 percent of GDP, which helped reduce the budget deficit to 7.4 percent of GDP, according to the finance ministry.
Since the onset of the Russian-Ukrainian war, Egypt’s inflation has been accelerating, reaching double digits at 15.3 percent in May (Y-o-Y), up from 4.9 percent in the same month of 2021, according the latest readings published by the Central Agency for Public Mobilization and Statistics (CAPMAS).
As per the finance ministry data, the COVID-19 pandemic and the war in Ukraine has cost Egypt EGP 440 billion in losses over the past two years.