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Sunday, 11 April 2021

Egypt needs to decrease its debt to address budget deficit: IMF

The coronavirus is the top fiscal risk, followed by an expected increase in commodities' prices and sovereign borrowing costs, Mauro said

Doaa A.Moneim , Thursday 28 Jan 2021
Business
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Egypt’s budget envelop is efficient amid the ongoing COVID-19 crisis, said Paolo Mauro, deputy director of the International Monetary Fund's (IMF) Department of Fiscal Affairs.

The African country, however, needs to extend additional support to vulnerable groups and decrease its debt in 2021/2022 to address the budget deficit, he added.

Mauro's statement was given to Ahram Online at a press conference the IMF held on Wednesday to release its Fiscal Monitor Update report.

Middle East countries, Mauro noted, need to further support people and firms, reprioritise their spending, and enforce policies that ensure funds are directed towards social safety nets as a priority amid the crisis.

On the expected fiscal risks for MENA in 2021, Mauro told Ahram Online that the coronavirus is the top fiscal risk in addition to the expected increase in commodities' prices over the year and sovereign borrowing costs.

He added that firms are also at risk due to fiscal deficits and the economic slowdown in 2021.

Vitor Gaspar, the IMF’s director of the Department of Fiscal Affairs, said at the conference that there is heightened uncertainty in many countries owing to the coronavirus. He added that decisive government actions are imperative to ensure swift and extensive vaccine rollouts, protect the most vulnerable households and otherwise viable firms, and foster a durable and inclusive recovery.

He noted that policies should respond flexibly to the changing economic and pandemic developments, adding that most countries will need to do more with less, considering the increasingly tight budget constraints.

“This means focusing on the hardest-hit and most vulnerable, including the poor, women, and informal workers, and firms that are likely to remain viable after the crisis or are systemically important to the economy,” said Gasper.

Gasper underscored the priorities that all countries should adopt currently, including health saving actions, green economy transformation, and applying policies and frameworks to deal with the severe repercussions of the pandemic.

He affirmed that boosting global cooperation to navigate the crisis and its aftermath is crucial for a better and near recovery.

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