What does the ultimate evaluate of the IMF’s $ 5.2 billion mortgage imply for the Egyptian economic system? – Economic system – Enterprise

The Worldwide Financial Fund (IMF) reached a staff-level settlement on the third evaluate of Egypt’s $ 5.2 billion mortgage, authorised underneath its stand-by association (SBA), mentioned on Tuesday. the underside.

In response to the settlement, Egypt will obtain the third and remaining tranche of the mortgage in June if the IMF’s government board approves the outcomes of the evaluate.

In Might 2020, the IMF authorised Egypt’s requests for 2 loans underneath two separate applications to take care of the influence of the coronavirus.

In an interview with Ahram On-line in October, the director of the IMF’s Center East and Central Asia division, Jihad Azour, mentioned that Egypt didn’t want further loans after the completion of the reform program backed by the IMF. the IMF. This system was carried out underneath its Prolonged Financing Facility (EFF), with a complete mortgage of $ 12 billion, which helped put the nation’s macroeconomic efficiency on monitor.

Nonetheless, the pandemic and the related stress on Egypt’s price range led it to use for loans to satisfy its monetary wants, in accordance with Azour.

Egypt launched an financial reform program in 2016 and accomplished it in 2019.

The 2 loans included a $ 2.7 billion Fast Finance Instrument (RFI) mortgage to handle the financial influence of the pandemic and supply the required liquidity to the market to strengthen its resilience.

It additionally included a $ 5.2 billion mortgage underneath the SBA program, which marked the eleventh monetary deal Egypt has signed with the fund since becoming a member of in 1945.

After receiving IMF Government Board approval in June 2020, Egypt obtained the primary tranche of $ 2 billion as fast disbursement and the second tranche of $ 1.6 billion in January after l approval of the primary program evaluate.

The principle goals of this system included serving to Egypt face the challenges of the coronavirus by assembly Egypt’s steadiness of funds wants, financing the price range deficit, sustaining the achievements revamped the previous 4 years in a part of the nation’s financial reform program and offering funding for the implementation of Egypt’s second wave. financial reforms targeted on structural reforms.

The SBA mortgage helped Egypt replenish its worldwide reserves which have been severely affected by the pandemic, falling to $ 36 billion in March, from $ 45.5 billion on the finish of February 2020.

With the disbursement of the RFI mortgage and the 2 tranches of the SBA mortgage, along with different components, Egypt’s worldwide reserves have began to extend since June 2020 to achieve $ 38.2 billion.

In response to the third SBA mortgage evaluate, the Egyptian economic system has demonstrated resilience and a balanced coverage response.

Egypt’s fiscal and financial insurance policies are anticipated to proceed to help the financial restoration within the quick time period, whereas preserving its macroeconomic stability. Nonetheless, the nation must broaden its structural reforms to solidify the restoration, handle post-coronavirus challenges, strengthen buffers and guarantee greater and extra inclusive progress, in accordance with the outcomes of the evaluate.

Egypt’s success in assembly the phrases of IMF applications strengthens its place ought to it want to hunt additional loans sooner or later.

In its up to date MENA Financial Outlook report, the IMF expects Egypt’s actual GDP progress to method pre-pandemic 2021/2022 ranges to achieve 5.7% , after declining to 2.5% in 2020/21, which ends in June.
He additionally projected that Egypt’s inflation price would fall to 4.8% in 2021, from 5.7% in 2020, earlier than rising to 7.2% in 2022.
Egypt’s account steadiness is anticipated to proceed to expertise unfavorable efficiency estimated at -4% in 2021 and 2022, in comparison with -3.1% in 2020, in accordance with the IMF.
“The current IMF evaluate of the SBA mortgage program predicted that Egypt would attain an preliminary price range surplus of two% of GDP from FY 2021/22 because of Egypt’s financial restoration and downward trajectory of its public debt, ”Maait mentioned Wednesday.

He added that the outcomes of the evaluate would positively mirror Egypt’s investments and the enterprise local weather.

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