Minister of Finance Mohamed Maait went on the offensive this week to respond to the negative economic picture of Egypt painted in foreign media reports.
Maait held a press conference on Monday to answer questions on Egypt’s anticipated deal with the IMF and unveil updated figures on public finances.
The objective of the press conference, he said, was to reassure Egyptians the state is moving on the right economic track and that there is no reason for panic. “Our economy is able to absorb shocks and the global challenges and we are doing our best to contain imported inflation,” he said.
He told reporters that we need to “take an objective look around".
“The economies of all countries, advanced and developing, have been hard hit by the exceptional circumstances,” he said.
“We are passing through a period of uncertainty, high inflation rates, and excessive borrowing costs.”
Despite the complicated global economic situation, Maait stressed that Egypt has been able to meet its financial obligations, including debt repayments.
Before the war erupted in Ukraine in February, Egypt needed only technical advice from the IMF on completing the implementation of its structural reform programme. But the repercussions of the war — in the form of increased import bills and inflation rates — had made a new loan necessary to shore up public finances, said Maait. He did not disclose how much the loan will be.
He refuted claims that the IMF is exerting pressure on the government to lift bread and ration card subsidies.
“The fund does not have the authority to say whether we should lift subsidies as this is the sovereign right of the Egyptian state,” he said.
Egypt submitted a request to the IMF for a new loan in the month following the outbreak of the Ukrainian war. On 25 August Prime Minister Mustafa Madbouli said details of current negotiations with the fund could not be revealed until an agreement is reached.
His statement followed a wave of reports in July and August claiming that Egypt may need a $15 billion package from the fund, though Maait had said earlier in August that the government is seeking a smaller amount.
Chairman of parliament’s Budget Committee Fakhri Al-Fiqi issued a statement two weeks ago saying he expected the loan to be in the range of $7.5 billion.
“I think we will be able to reach an agreement with the IMF very soon and it will send a message of confidence to citizens and investors alike,” said Al-Fiqi.
Following his Monday press conference, Maait used a series of TV interviews to take aim at media outlets which he accused of spreading “fake news and defamatory lies” about the Egyptian economy.
“These malicious reports either stem from ignorance or from a desire to stoke panic among Egyptians,” said Maait. He singled out “the claim that Egypt would be obliged to repay as much as $30 billion in debt servicing costs during the second half of this year” for particular scorn.
Both Maait and Madbouli said that in just one month more than 150 negative reports had been published about the Egyptian economy in the foreign press.
“I do not think this is a coincidence but part of a concerted campaign to paint a negative image of Egypt and incite riots on streets. It is the role of every Egyptian at this difficult stage to keep alert and join the government in safeguarding the nation against any troubles,” said Maait in an interview on Monday night.
Economist Hani Geneina, who claimed in a TV interview on Saturday that the government would face $30 billion in external financial obligations between 1 July and the end of the year, tweeted after Maait’s press conference that he wanted to clarify his earlier figure.
“The amount I stated is the result of $19 billion that Egypt has to make in external loan repayments plus an estimated $10 billion trade deficit. Now the government has clarified that of the $19 billion, $13.5 billion are owed to Arab Gulf countries who will reinvest the amount in Egypt, meaning Egypt’s external debt repayments between July and December will come in at $5.5 billion,” he wrote.
During his media offensive, Maait sought to present a more optimistic prognosis for the economy. He underlined that the government’s economic reform measures led to a fall in domestic debt from 103 per cent of GDP in June 2012 to 87.2 per cent in June 2022.
Maait also praised the robust performance of the export sector.
“Oil exports generated $13 billion, meaning that from being a burden exacerbating the budget deficit the oil sector generated a surplus for the first time,” said Maait.
Expatriate remittances hit a record $32.2 billion last year, and the Suez Canal earned $7 billion in transit fees.
Maait also said Egypt had been able to engineer a growth rate of 6.6 per cent, its highest since 2008, compared to an average of 3.2 per cent among emerging economies and that the budget deficit had fallen to 6.1 per cent last year, down from 13 per cent FY 2012-13.
Maait told Bloomberg that the budget deficit is expected to further narrow to 5.6 per cent, and pointed out that tax revenues were up 18.7 per cent year-on-year, reflecting efforts to integrate the informal sector into the economy.
*A version of this article appears in print in the 1 September, 2022 edition of Al-Ahram Weekly.