On February 4, 2019, the Executive Board of the International Monetary
Fund (IMF) completed the fourth review of Egypt’s economic reform
program supported by an arrangement under the Extended Fund Facility
(EFF). The completion of the review allows the authorities to draw the
equivalent of SDR 1,432.76 million (about US$2 billion), bringing total
disbursements to SDR 7,163.81 million (about US$10 billion).
The three-year EFF arrangement in the amount equivalent to SDR 8.597
billion (about US$12 billion at the time of approval, or 422 percent of
quota) was approved by the Executive Board on November 11, 2016 (see Press Release No. 16/501) to support the authorities’ economic reform program.
Following the Executive Board discussion on Egypt, Mr. David Lipton,
First Deputy Managing Director and Acting Chair, said:
“The macroeconomic outlook remains favorable, supported by strong
policy implementation. Robust growth and a narrowing of the current
account deficit reflect a rebound in tourism and strong remittances,
while unemployment has declined to its lowest level since 2011. The
public-debt-to-GDP ratio declined markedly last year and is projected
to decline further over the medium term due to the authorities’ fiscal
consolidation efforts and high nominal GDP growth.
“While the outlook remains favorable, a more difficult external
environment poses new challenges as global financial conditions have
tightened. Egypt has successfully weathered recent capital outflows,
but consistent policy implementation will be essential to further
strengthen policy buffers, including by containing inflation, enhancing
exchange rate flexibility, and reducing public debt.
“Monetary policy remains anchored by the medium-term objective of
bringing inflation to single digits. The recent pick-up in headline
inflation reflected temporary increases in food and energy prices, but
a restrictive monetary policy stance has helped to reverse the increase
and keep core inflation well anchored. The authorities have taken
important steps to deepen the foreign exchange market and allow greater
exchange rate flexibility, including by eliminating the repatriation
mechanism.
“This year’s primary surplus target of 2 percent of GDP appears on
track, which would achieve a cumulative fiscal adjustment of 5.5
percent of GDP in three years. The authorities remain committed to
reaching cost recovery for most fuel products by mid-2019 and
implementing automatic fuel price indexation, which together are
critical to encourage more efficient energy use, and combined with
revenue enhancing reforms will help create fiscal space for
high-priority spending on health and education.
“The authorities’ structural reform agenda aims to support inclusive
growth by addressing long-standing constraints to private sector
development. These include reforms to improve competition policy,
public procurement, management of SOEs, and land allocation. Sustained
implementation of these reforms is essential to reduce opportunities
for rent seeking and to support strong and inclusive medium-term growth
and job creation.
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Table 1. Egypt: Selected Macroeconomic Indicators,
2015/16–2019/20 1/
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2015/16
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2016/17
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2017/18
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2018/19
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2019/20
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Third Review
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Prel.
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Third Review
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Revised Proj.
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Output and prices
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Real GDP (market prices)
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4.3
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4.2
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5.2
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5.3
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5.5
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5.5
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5.9
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Consumer prices (end of period)
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14.0
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29.8
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12.6
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14.4
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13.1
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14.5
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10.7
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Consumer prices (period average)
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10.2
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23.5
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20.8
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20.9
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14.4
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15.8
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12.8
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Public finances 2/
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Gross Debt
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96.9
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103.2
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92.4
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92.6
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86.2
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86.0
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83.3
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External
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7.8
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18.1
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18.5
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19.2
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17.0
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18.0
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17.6
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Domestic
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89.0
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85.0
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73.9
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73.4
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69.2
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68.0
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65.7
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Budget sector 3/
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Revenue and grants
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18.1
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19.0
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18.2
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18.2
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18.6
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18.3
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17.8
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Expenditure (incl. net acquisition of financial assets)
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30.7
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29.9
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27.9
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27.9
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26.7
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26.6
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24.5
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Of which:
Energy subsidies
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3.0
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4.1
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3.4
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3.4
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2.1
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2.1
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1.2
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Overall balance
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-12.5
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-10.9
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-9.7
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-9.8
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-8.1
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-8.3
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-6.7
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Overall balance, excl. grants
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-12.7
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-11.4
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-9.7
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-9.8
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-8.1
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-8.3
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-6.7
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Primary balance 4/
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-3.5
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-1.8
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0.2
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0.2
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2.0
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2.0
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2.0
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Monetary sector
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Credit to the private sector
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14.2
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38.0
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7.5
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10.1
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18.2
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19.2
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18.9
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Reserve money
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29.3
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-7.8
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40.2
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28.3
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27.6
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34.2
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20.7
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Broad money (M2)
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18.6
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39.3
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23.4
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18.5
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19.8
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20.8
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20.5
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Treasury bill rate, 3 month (average, in percent)
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11.8
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17.5
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18.5
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18.8
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…
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…
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…
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External sector
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Exports of goods (in US$, percentage change)
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-15.9
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16.2
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13.8
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18.9
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16.5
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14.4
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5.3
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Imports of goods (in US$, percentage change)
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-6.4
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2.8
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4.5
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6.9
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10.0
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6.4
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3.1
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Merchandise trade balance
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-11.6
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-14.5
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-14.5
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-14.9
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-12.5
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-12.4
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-11.3
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Current account
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-6.0
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-5.6
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-2.8
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-2.4
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-2.6
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-2.5
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-1.8
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Capital and financial account (incl. errors and omissions)
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5.1
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4.8
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5.0
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4.0
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1.8
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2.0
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2.0
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Foreign direct investment (net, in billions of US$)
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6.8
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7.8
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7.8
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7.4
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9.5
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9.5
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11.2
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External debt 5/
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18.3
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41.3
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34.5
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37.4
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29.9
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34.4
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31.3
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Gross international reserves (in billions of US$)
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17.1
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30.7
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44.4
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43.5
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44.8
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44.9
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45.4
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In months of next year's imports of goods and services
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3.0
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5.0
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6.8
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6.6
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6.1
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6.6
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6.3
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In percent of short-term external debt 6/
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173.7
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124.5
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146.2
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139.1
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191.4
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160.2
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147.7
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Financing gap (in billions of US$)
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…
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…
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0.0
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0.0
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1.1
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0.0
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0.0
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Memorandum items:
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Nominal GDP (in billions of Egyptian pounds)
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2,709
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3,470
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4,436
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4,437
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5,365
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5,414
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6,458
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Nominal GDP (in billions of US$)
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332
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256
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250
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250
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306
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303
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336
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GDP per capita (in US$)
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3,686
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2,704
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2,578
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2,573
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3,081
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3,052
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3,314
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Unemployment rate (period average, percent)
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12.7
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12.2
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11.1
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10.9
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9.7
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9.6
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8.3
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Population (in millions)
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90.2
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94.8
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97.0
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97.0
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99.2
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99.2
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101.5
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Sources: Egyptian authorities; and IMF staff estimates and
projections.
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1/ Fiscal year ends June 30.
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2/ General government includes the budget sector, the
National Investment Bank (NIB), and social insurance funds.
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3/ Budget sector comprises central government, local
governments, and some public corporations.
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4/ The primary balance for 2017/18 excludes the
recapitalization of the CBE for EGP 6 billion.
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5/ Includes multilateral and bilateral public sector
borrowing, private borrowing and prospective financing.
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6/ Debt at remaining maturity and stock of foreign holding
of T-bills.
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