النص الكامل لتقرير صندوق النقد الدولي حول المراجعة الثالثة للإقتصاد المصري (إنجليزي)

Washington 7 June 2024:

• International Monetary Fund (IMF) staff and the Egyptian authorities have reached staff level agreement on a set of comprehensive policies and reforms needed to complete the third review under the Extended Fund Facility (EFF) arrangement. Subject to approval by the IMF’s Executive Board, Egypt will have access to about US$820 million (SDR 618.1 million).
• The Egyptian authorities’ recent efforts to restore macroeconomic stability have helped improve economic conditions. But the regional environment remains difficult, and downside risks and domestic structural challenges require decisive implementation of program commitments. Tight monetary conditions are needed in the short term to reduce inflation. A flexible exchange rate regime remains a cornerstone of the authorities’ macroeconomic program.
• The authorities’ fiscal consolidation efforts remain on track. Going forward, additional efforts need to focus on growth friendly revenue mobilization, generating fiscal space to invest in human capital through health and education spending along with targeted social spending, enhancing domestic debt management, and containing fiscal risks.
• The stage is set for an acceleration of structural reforms, which will be critical to achieving the objective of sustainably raising private sector-led growth. The reform agenda includes measures to improve the business environment, by removing binding constraints to private sector activity and leveling the playing field vis-à-vis state entities.

Washington DC.  An International Monetary Fund mission led by Ivanna Vladkova Hollar held in-person discussions with the authorities during May 12-26 in Cairo and virtually thereafter. At the conclusion of the discussions, Ms. Vladkova Hollar issued the following statement:

“We are pleased to announce that the Egyptian authorities and the IMF have reached staff level agreement on the economic policies needed to complete the third review of the EFF arrangement.

“While geopolitical tensions and their impact on Egypt remain challenging, the authorities have stayed the course to preserve macroeconomic stability through fiscal discipline, tight monetary policy, and a shift to a flexible exchange rate regime. These efforts are beginning to deliver an improved outlook, improved FX availability, inflation starting to slow down, and signs of recovery in private sector sentiment. However, downside risks surround the economic outlook, which continues to be affected by spillovers from the conflict in Gaza and Israel and risks of persistence of trade disruptions in the Red Sea, negatively impacting Suez Canal receipts.

“Strong policies are critical to address key risks and domestic structural challenges, including the need to boost the role of the private sector in economic activity, and addressing the challenge of high inflation, elevated government debt and high gross financing needs. In this context, the authorities and the mission agreed that the implementation of the government reform plans as articulated in program commitments will be key to maintain macroeconomic stability and enhance private sector-led growth.

“The authorities continue to pursue prudent fiscal policies. Achieving their ambitious primary balance targets would strengthen public finances and contain debt sustainability risks. There is a need to improve the composition of fiscal consolidation through stronger domestic revenue mobilization efforts, which are critical to generate fiscal space for the expansion of social programs and additional health and education spending to support the authorities’ objective to achieve higher and more inclusive growth. The mobilization of more domestic resources, including through a rationalization of VAT exemptions, is an important element in this strategy. Meeting fiscal objectives will also require steps to contain fiscal risks, including those associated with state-owned companies in the energy sector, which need to gradually restore cost recovery.  Further efforts to enhance debt management are needed to contain gross financing needs and improve debt reporting and investor relations. Continuing the divestment program could help improve efficiency and attract new investment, while generating additional resources for the Treasury.

“The authorities and the mission agreed that monetary policy conditions need to remain tight in the short term to help bring inflation toward the CBE target. The mission was encouraged by the central bank’s ongoing efforts to enhance its operations (including through the use of forecasting models and stronger communication), to reinforce progress toward a full-fledged inflation-targeting regime. Strengthening financial sector resilience, as well as governance practices and competition in the banking sector, should also be key priorities.

“Since the exchange rate unification in March, financing conditions have improved. The recent Ras El-Hekma investment deal is a positive economic development, and the mission encouraged the authorities to continue disclosing information about this project. Considering the sizeable potential capital inflows, proper management will be critical to avoid any disruptive macroeconomic challenges that could undermine the authorities’ objective to diversify the Egyptian economy and achieve more inclusive growth. To this end, the authorities are developing contingency plans to adequately address these challenges, as needed.

“The authorities are making progress on their structural reform agenda, but there is scope to accelerate the implementation of the state-ownership policy to level the playing field and increase private sector-led growth, and to implement reforms to enhance the business environment, including efforts to automate and modernize trade facilitation procedures to increase efficiency and remove trade barriers.

“Consideration of the third review of Egypt’s EFF-supported program by the Executive Board is expected in the coming weeks. The mission would like to thank the Egyptian authorities for the constructive policy discussions and warm hospitality.”