The Central Bank of Egypt (CBE) and the Ministry of Finance announced on Sunday that Egypt and the International Monetary Fund (IMF) have reached an agreement on the economic and structural policies and reforms for Egypt’s new IMF-backed economic reform programme.
he meetings between the Egyptian authorities and IMF officials and experts were held on the sidelines of the IMF and the World Bank Group’s annual meetings in Washington DC, according to a statement released by the finance ministry.
Egypt had filed a request with the IMF in March to secure a new loan under a fresh economic reform programme to address the harsh impacts of the Russian-Ukrainian conflict on the Egyptian economy.
The two sides aim to announce a final deal for the new reform programme in Cairo in the near future, the statement added.
According to the finance ministry statement, the new reform programme rests on three cornerstones: Egypt will implement financial policies reforms, monetary policies reforms and a package of structural reforms for the Egyptian economy.
Financial policies
The government targets reaching an annual initial surplus and keeping the public debt-to-GDP ratio below 80 percent over the short term.
It also targets prolonging government debt maturity and diversifying financing resources.
The government also targets improving the efficiency of both the budgetary revenues and expenditures as well as raising spending on human development.
It aims to continue expanding social protection programmes, including raising the incomes of state employees’ incomes and increasing allocations to pensions and insurance that benefit over 10 million households and individuals.
It also targets strengthening the Takaful and Karama programme that benefits around five million households and to the Decent Life programme that aims to improve infrastructure and standards of livings in rural areas.
The government will also continue to enhance transparency and financial disclosure efforts.
Monetary policies
The government targets continuing efforts to curb inflation and ensure price stability in the local market.
It also targets improving the efficiency of Egypt’s current monetary policy tools and shore up the country’s banking sector.
The agreement also aims to improve the efficiency of the exchange rate market.
Structural reforms
The government targets implementing measures to raise the competitiveness of the Egyptian economy, improve the business climate, increase productivity and export rates, boost green activities, increase the share of private sector and create more of job opportunities.
It will fast track the release of the State Ownership Policy in its final draft in a way that reflects the Egyptian state’s desire to stimulate and attract private sector investments.
The government also aims to boost competitiveness in the Egyptian market and simplify trade and investment in a way that attracts more local and foreign investments.
“Very productive talks”: IMF
“IMF staff and the Egyptian authorities have held very productive in-person discussions on the margins of the IMF and World Bank annual meetings and made substantial progress on all policies including a continued fiscal consolidation path that will safeguard public debt sustainability and ensure a steady decline of the debt-to-GDP ratio over the medium term. Additional fiscal and related structural policies that would further expand the social safety net for the most vulnerable, improve the budget composition, and enhance fiscal transparency,” Gerry Rice, the IMF’s director of communications, said on Saturday
Rice added that monetary and exchange rate policies would anchor inflation expectations, improve monetary policy transmission, improve the functioning of the foreign exchange market, and bolster Egypt’s external resilience.
“This would enable Egypt to gradually and sustainably rebuild foreign reserves,” he added.
“The implementation of the authorities’ comprehensive structural reform agenda would gradually enhance the competitiveness of the economy, reduce the role of the state in the economy, level the playing field for the private sector, improve the business climate, and foster transition towards a greener economy,” according to Rice.
