{
  "title": "IMF Executive Board Completes First Review under the Stand-By Arrangement (SBA) for the Arab Republic of Egypt",
  "publication": "IMF News, December 18, 2020",
  "sourceUrl": "https://www.imf.org/en/news/articles/2020/12/18/pr20382-egypt-imf-executive-board-completes-first-review-under-the-stand-by-arrangement",
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  "summary": "The Executive Board of the International Monetary Fund (IMF) completed today the first review of Egypt’s economic reform program supported by a 12-month Stand-By Arrangement (SBA), allowing the authorities to draw SDR 1,158.04 million (about US$1.67 billion).",
  "publishDate": "2020-12-18",
  "sections": [
    {
      "heading": "Review outcome and disbursements",
      "content": "- The Executive Board completed the first review of Egypt’s economic reform program supported by a 12-month Stand-By Arrangement (SBA).\n- The completion of the review allows the authorities to draw SDR 1,158.04 million (about US$1.67 billion).\n- Total disbursements under the SBA following this review amount to SDR 2,605.6 million (about US$3.6 billion).\n- The 12-month SBA was approved in the amount equivalent to SDR 3,763.64 million (about US$5.2 billion at the time of approval, or 184.8 percent of quota) on June 26, 2020."
    },
    {
      "heading": "Economic context and COVID-19 response",
      "content": "- Egypt “has managed well the COVID-19 pandemic and the related disruption to economic activity,” according to the IMF.\n- Proactive measures were taken to address health and social needs and to support sectors most directly affected by the crisis.\n- The growth slowdown “has so far been less severe than expected with Egypt expected to be among the few countries with positive growth rate this year.”\n- External market conditions improved with a strong return of portfolio inflows."
    },
    {
      "heading": "Risks and fiscal/monetary/financial policy assessment",
      "content": "- Key risks:\n  - A second wave of the pandemic increases uncertainty about the pace of the domestic and global recovery.\n  - The high level of public debt and gross financing needs leave Egypt vulnerable to volatility in global financial conditions.\n- Fiscal position and outlook:\n  - “Budget execution is on track to achieve the program target for FY2020/21.”\n  - The existing budget envelope “provides sufficient flexibility to accommodate any additional support for vulnerable groups in the event of a second wave of COVID-19, while maintaining the program’s fiscal objectives.”\n  - The envisaged economic recovery should allow public debt to resume its downward trajectory from FY2021/22.\n  - Continued shift toward longer-term debt issuance could mitigate rollover risks.\n  - Continued progress on fiscal structural reforms is critical to ensure additional space for high priority spending on health, education, and social protection.\n- Monetary policy and exchange rate:\n  - The Central Bank of Egypt’s (CBE) “data driven approach to monetary policy has been instrumental to anchor inflation expectations and achieve low and stable inflation.”\n  - Monetary easing in recent months should further support economic activity and ease appreciation pressures from large capital inflows, which has had a dampening effect on inflation.\n  - “Two-sided exchange rate flexibility is essential to absorb external shocks and maintain competitiveness.”\n- Banking sector resilience:\n  - “The banking system has been resilient thus far, having entered the crisis well-capitalized and with ample liquidity.”\n  - The CBE’s initiatives have helped ensure continued access to credit through the crisis.\n  - Ongoing financial sector supervision will be critical to maintain the resilience of the banking sector as crisis initiatives begin to expire."
    },
    {
      "heading": "Structural reforms and policy recommendations",
      "content": "- The government’s structural reform agenda is described as “appropriately ambitious.”\n- Policy priorities and recommendations:\n  - Sustain progress on structural and governance reforms to foster higher, greener, and more inclusive private-sector-led growth.\n  - Continue and expand initiatives to support a green recovery.\n  - Enhance the transparency of state-owned enterprises.\n  - Facilitate trade and remove bureaucratic obstacles to private sector development.\n  - Ensure a level playing field for all economic agents.\n  - Timely finalization of a restructuring plan for the National Investment Bank to reduce fiscal risks.\n  - Removing bureaucratic obstacles and ensuring a level playing field “will lead to durable improvements in the investment climate and governance.”\n\nPress Release No. 20/382 — IMF Executive Board Completes First Review under the Stand-By Arrangement (SBA) for the Arab Republic of Egypt (December 18, 2020)\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Key Questions on Egypt\n- Arab Republic of Egypt and the IMF\n- Special Drawing Rights (SDRs) -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- Press Release No. 20/248\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2020/12/18/pr20382-egypt-imf-executive-board-completes-first-review-under-the-stand-by-arrangement"
    }
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    "Published: December 18, 2020",
    "The Executive Board completed the first review of Egypt’s economic reform program supported by a 12-month Stand-By Arrangement (SBA).",
    "The completion of the review allows the authorities to draw SDR 1,158.04 million (about US$1.67 billion).",
    "Total disbursements under the SBA following this review amount to SDR 2,605.6 million (about US$3.6 billion).",
    "The 12-month SBA was approved in the amount equivalent to SDR 3,763.64 million (about US$5.2 billion at the time of approval, or 184.8 percent of quota) on June 26, 2020.",
    "Egypt “has managed well the COVID-19 pandemic and the related disruption to economic activity,” according to the IMF.",
    "Proactive measures were taken to address health and social needs and to support sectors most directly affected by the crisis.",
    "The growth slowdown “has so far been less severe than expected with Egypt expected to be among the few countries with positive growth rate this year.”",
    "External market conditions improved with a strong return of portfolio inflows.",
    "Key risks:",
    "Fiscal position and outlook:",
    "Monetary policy and exchange rate:",
    "Banking sector resilience:",
    "The government’s structural reform agenda is described as “appropriately ambitious.”",
    "Policy priorities and recommendations:",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Key Questions on Egypt](https://www.imf.org/en/countries/egy/egypt-qandas)",
    "[Arab Republic of Egypt and the IMF](http://www.imf.org/external/country/EGY/index.htm)",
    "[Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[Press Release No. 20/248](https://www.imf.org/en/News/Articles/2020/06/26/pr20248-egypt-imf-executive-board-approves-12-month-us-5-2billion-stand-by-arrangement)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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