It's critical for Egypt to adopt flexible exchange rate to protect economy from external shocks: IMF’s Azour

Doaa A.Moneim , Thursday 12 Oct 2023

It is necessary and critical for Egypt to adopt a flexible regime for its exchange rate in order to protect its economy from the external shocks that are continuing to emerge, Jihad Azour, the Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF), told Ahram Online.

IMF s Azour
Jihad Azour, the director of the Middle East and Central Asia Department


Azour made his comments in his answers to Ahram Online questions on Egypt’s economic landscape in light of the recent estimates and forecasts the fund released on the sidelines of the IMF and the World Bank Group annual meetings, which are taking place in Marrakech, Morocco 9-15 October.

This took place during the press briefing of the IMF on Thursday to release its key forecasts on the economic outlook of the MENA region amid the ongoing severe global economic and political challenges.

Egypt is currently engaged in a four-year Extended Fund Facility (EFF) programme with the IMF worth $3 billion.

The current exchange rate of the US dollar against the Egyptian pound in the official market is 1 US dollar = EGP 30.96.

The IMF has not completed any of its reviews of the progress in implementing the loan programme since approving it in December 2022.

“On the fiscal front, there is a range of procedures has been taken by the Egyptian Ministry of Finance that aim to improve the fiscal performance, restore the easing of the public spending to be more targeted and to contribute to lowering the social burdens. And these actions are on the right track," according to Azour.

In FY2022/2023, Egypt’s budget recorded a primary surplus of EGP 164.3 billion, equivalent to 1.7 percent of the country’s GDP, despite a 16.3 percent growth in public expenditures, totalling EGP 2.1 trillion, and an 11.5 percent growth in public revenues, amounting to EGP 1.5 trillion, according to the finance ministry.

On the Extended Fund Facility (EFF) programme with Egypt, Azour told Ahram Online that the programme aims to preserve a solid fiscal condition for Egypt.

It would enable the country to achieve a budget surplus and target lowering debt costs, which fuel budget deficits.

Ahram Online also asked Azour about the IMF’s estimates of the financing gap Egypt is expected to face through the end of the programme in 2026, which the fund estimated at  $17 billion at the time of its approval of the loan programme.

Azour responded by stressing that making such an estimate requires having an overall look at the the procedures Egypt has committed to adopt under the IMF’s loan programme.

“The financing gap is a residual between the programme’s procedures that aim to enhance the financing capabilities of the country, leaving a wide room for the private sector to play a leading role in the economy and also setting the financing needs of the country," he said.

Therefore, it's difficult in the time being to make such an estimate, he added. 

Earlier on Thursday, Managing Director of the IMF Kristalina Georgieva stated that the Egyptian government is doing well in terms of the actions it adopts to level up the field with the private sector and to restore its fiscal performance.

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