Egypt’s real GDP growth is expected to rebound significantly in FY2021/2022 to 5.2 percent, up from the projected 2.8 percent for the current FY2020/2021, according to the chief of the International Monetary Fund’s (IMF) mission chief for Egypt on the stand-by agreement programme Celin Allard.
Allard made her comments during a press briefing and in response to Ahram Online’s question about the risks Egypt’s macroeconomy is likely to face in FY2021/22. The press briefing was held virtually on Monday on the occasion of the completion of Egypt’s 12-month SBA loan programme, which was announced on Wednesday.
Allard said that Egypt’s macroeconomy faces three risks, including the uncertainty the pandemic imposes on all economies, the slowdown in the vaccine rollout, and the elevated debt levels and growth of its financial needs.
Allard stressed that Egypt needs to continue setting a balance between maintaining its recovery efforts and preserving its financial stability.
Regarding whether Egypt is in talks with the IMF to secure more loans going forward, Allard emphasised that the government will decide if it needs to engage in future loan programmes with the IMF, adding that the IMF will remain closely engaged with the Egyptian authorities and continue supporting the country’s reform agenda.
Allard added that the IMF is continuing its technical support programmes with Egypt and is sharing policy advice.
On the private sector’s role in Egypt’s economy, Allard noted the country has to reduce the role of the state in the economy and unleash the private sector’s hand to play a greater role in Egypt’s economy.
She also asserted the need to make further progress in providing more resource allocations for private sector entities to be more widespread.
On Egypt’s external debt, Allard lauded the government’s medium‑term revenue strategy and its medium-term debt strategy as key instruments for lowering the high public debt and gross financing needs while creating space for priority spending.
Allard also said that there are no further measures that need to be implemented by Egypt with regards to the SBA programme.
However, she stressed that “Egypt needs to take a number of measures for its growth going forward, including strengthening social protection and better integrating in global trade so as to support and increase its exports.”
On Wednesday, the IMF’s Executive Board announced the completion of the second and final review of Egypt’s economic reform program under the SBA, allowing the country to receive about $1.7 billion, the third tranche of the loan.
With the disbursal of the third tranche, Egypt will have received a total of $5.4 billion.
The programme's main objectives are helping Egypt cope with the challenges posed by the coronavirus by meeting the country’s balance of payment needs, reducing the budget deficit, maintaining the achievements made over the past four years under the country’s economic reform programme, and providing finances for implementing Egypt’s second wave of economic reforms.
The SBA loan has helped Egypt replenish its international reserves, which were severely hit by the pandemic, declining to $36 billion in March, down from $45.5 billion by the end of February 2020.
In May 2020, Egypt filed for another loan under the rapid finance instrument (RFI) worth $2.7 billion to counter the COVID-19 pandemic, and received the sum in a one-off tranche.
The total value of the two loans amounts to $8 billion.