Via IMF (Den Internationale Valutafond)

Egypt: IMF Staff Reaches Staff-Level Agreement on the First Review for the 12-Month Stand-by Arrangement







November 19, 2020







End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.





  • Egypt’s economy has performed better than expected despite the pandemic, thanks to a swift, balanced and comprehensive stimulus package, monetary policy response, targeted financial sector initiatives, and a timely financing request from the IMF’s Rapid Financing Facility and Stand-by Arrangement of nearly $8 billion.
  • While domestic activity shows early signs of recovery and financial market conditions have improved, key sectors like tourism remain at an almost standstill and risks linger particularly amid a second global wave of COVID-19 infections.
  • Continued strong program implementation, including sustained progress in key structural reforms, is vital to build resilience. This will also ensure that investors remain confident in the outlook for Egypt.

Washington, DC:
An International Monetary Fund (IMF) team led by Ms. Uma Ramakrishnan held
a virtual mission from November 4 to 15, 2020 with the Egyptian authorities
to discuss recent economic developments and policy priorities of the first
review for Egypt’s economic program supported by the IMF’s 12-month
Stand-by Arrangement. At the end of the discussions, Ms. Ramakrishnan
issued the following statement:

“The IMF staff team and the Egyptian authorities have reached a staff-level
agreement on the first review of Egypt’s economic program supported by the
IMF’s $5.2 billion Stand-by Arrangement (

press release. 20/248

). This agreement is subject to approval by the IMF’s Executive Board,
which will take place in the coming weeks. Upon approval, an additional SDR
1.16 billion (about US$1.6 billion) will be made available to Egypt.

“The Egyptian economy has performed better than expected despite the
pandemic. Containment measures, supported by the authorities’ effective
crisis management, and strong implementation of their policy program helped
mitigate the effects of the crisis. After recording a growth rate of 3.6
percent in FY2019/20, growth is projected to reach 2.8 percent in
FY2020/21, with a modest recovery in all sectors except tourism, as the
pandemic continues to disrupt international travel. Pandemic-related risks
still exist in light of the second global wave of COVID-19 cases.

“The authorities’ commitment and strong performance helped meet all program
targets for end-September 2020. Net international reserve accumulation and
the primary balance exceeded the program targets.
Subdued inflation in September (3.7 percent)—primarily reflecting lower
food prices—triggered the monetary policy consultation clause.
The updated financial information of state-owned enterprises (SOEs) and
Economic Authorities was published in September. Additionally, the customs
law to streamline the customs procedures was passed ahead of schedule.

“The Central Bank of Egypt’s (CBE) monetary policy remains appropriately
accommodative. In this regard, we welcome the CBE’s recent interest rate
cuts to further support economic recovery amid muted inflation. The
exchange rate has modestly appreciated in the wake of an increase in
capital inflows. Continued exchange rate flexibility will help absorb
external shocks. Egypt’s banking system remains liquid, profitable, and
well capitalized.

“Egypt’s fiscal policy in FY2020/21 remains appropriately focused on
supporting the immediate priorities in health, protecting the most
vulnerable, and supporting sectors affected by the pandemic, and remains on
track to achieve a primary surplus of 0.5 percent of GDP. The government’s
commitment to returning to a primary surplus of 2 percent of GDP as the
economic recovery becomes entrenched will be essential to reduce public
debt and support fiscal sustainability. The recent publication of contracts
awarded for COVID-19-related spending is a welcome step towards increasing
transparency and the team encourages continued updates to these
publications.

“The team would like to thank the Egyptian authorities and the technical
teams at the CBE and the Ministry of Finance, and other interlocutors for
the constructive and candid discussions.”


IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Randa Elnagar

Phone: +1 202 623-7100Email: MEDIA@IMF.org

@IMFSpokesperson








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