'Great progress' in Egypt-IMF talks; work underway to resolve differences: Minister tells Arabiya

Ahram Online , Wednesday 27 Jul 2022

Talks between Egypt and the International Monetary Fund (IMF) on an Egyptian request for a new loan have achieved "great progress," and the government is still working to resolve disputed points with the international lender, Minister of Finance Mohamed Maait told Al-Arabiya on Wednesday.

Mohamed Maait

 

On the sidelines of the general assembly meeting of the African Reinsurance Corporation (Africa Re) in Cairo, Maait said that the value of the loan has not yet been set.

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 to meet the country’s financial needs in response to the global economic challenges amid the ongoing Russia-Ukraine war.

The new deal with the IMF could be under the Extended Fund Facility (EFF) for four years, but a programme under the Stand-by Arrangement (SBA) and the Financial Programming and Policies are also on the table, Maait said last week.

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 minister’s Wednesday remarks come a day after the IMF had said that Egypt is required to make “decisive progress” on fiscal and structural reforms.

In its ex-post evaluation (EPE) of Egypt’s exceptional access under the 2020 SBA, the IMF said such reforms are needed to boost the Egyptian economy’s competitiveness, improve governance, and enhance its resilience against shocks.

The IMF’s executive directors underscored Egypt’s “remaining vulnerability from a high public debt burden and large gross financing requirements.”

The lender added that required reforms include fostering private sector development, improving governance and reducing the role of the state.

Egypt has been working to grant the private sector a greater role in the country’s economic activities. In June, Egypt launched the State Ownership Policy Document that charts a roadmap for expanding the private sector’s role in a number of economic activities in the Egyptian market.

The policy sets a number of paths to expand the role of the private sector across the country, including through offering state-owned companies on the EGX whether through a private offering or under the IPO programme.

Egypt plans to raise the private sector’s share in the country’s economic activity to 65 percent over three years, up from the current 30 percent.

Last week, Egypt’s cabinet approved in its weekly meeting offering for sale the Armed Forces-run National Company for Petroleum and the National Company for Natural Water in Siwa (SAFI) on the Egyptian Exchange (EGX).

The companies are set to be offered to private sector investors in principle then on the EGX.

In May, Egypt’s Prime Minister Mostafa Madbouly said the government plans to offer 12 companies under the government’s IPO programme on the EGX by the end of 2022.

This included two army-run companies and others that are under the umbrella of the public business sector, Madbouly said.

In his Wednesday remarks, Maait affirmed the government’s commitment to its IPO programme, which includes offering 10 companies before the end of this year given the current disruption in local and global markets.

Egypt has been struggling to face the negative repercussions of the Russia-Ukraine war on its economy, with the crisis affecting the country’s tourism sector as well as food and energy prices.

While the IMF has maintained its projections for Egypt’s real GDP growth in 2022 at 5.9 percent, it has revised it down to 4.8 percent in 2023 due to the war’s repercussions.

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