Arab Republic of Egypt: First Review Under the Extended Arrangement Under the Extended Fund Facility and Requests for Waivers for Nonobservance and Applicability of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for the Arab Republic of Egypt

IMF Staff Country Reports, September 26, 2017

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Canonical URL: Arab Republic of Egypt: First Review Under the Extended Arrangement Under the Extended Fund Facility and Requests for Waivers for Nonobservance and Applicability of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for the Arab Republic of Egypt

All quantitative performance criteria (PCs) for December 2016 were met.
A large depreciation of the pound is posing policy challenges.
Because of higher costs of fuel products, the end-June targets for the fuel subsidy bill and the primary deficit are likely to have been missed.
The authorities are taking corrective measures by implementing a stronger fiscal adjustment in the next two years, including through the fuel subsidy reform.
IMF staff supports the authorities’ request for the completion of the first review under the Extended Arrangement under the EFF arrangement.

Currency depreciation: Described as "large"; creating policy challenges for meeting fiscal and external targets.
Fuel prices and subsidies:
- Higher costs of fuel products are noted as a principal reason for likely misses of end-June targets for the fuel subsidy bill and the primary deficit.
- Fuel subsidy reform is a central element of the authorities’ corrective measures.
Fiscal adjustment:
- Authorities plan a stronger fiscal adjustment over the next two years to restore program targets.
- Adjustment measures include reforms to energy subsidies.

IMF staff recommendation: Supports the authorities’ request for completion of the first review under the Extended Arrangement under the EFF.
Requests addressed: Waivers for Nonobservance and Applicability of Performance Criteria.

Subjects: Banking, Energy subsidies, Expenditure, External debt, Fuel prices, Inflation, Prices, Revenue administration
Keywords: CR, economic reform program, EFF arrangement, Egypt, Energy subsidies, energy subsidy reform, fuel price hike, Fuel prices, Global, Inflation, inflation expectation, ISCR, reform, reform agenda