{
  "title": "Transcript of Press Conference on the IMF Program for Egypt",
  "publication": "IMF News, January 10, 2023",
  "sourceUrl": "https://www.imf.org/en/news/articles/2023/01/10/tr011023-transcript-of-egypt-press-briefing",
  "canonical": "https://www.imf.org/en/news/articles/2023/01/10/tr011023-transcript-of-egypt-press-briefing",
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  "summary": "Transcript of Press Conference on the IMF Program for Egypt",
  "publishDate": "2023-01-10",
  "sections": [
    {
      "heading": "Program design and overarching objectives",
      "content": "- Program duration: 46 month program duration.\n- Program is anchored on three main pillars:\n  - Exchange rate and monetary policies: permanent shift to a flexible exchange rate regime to absorb external shocks, rebuild reserves, and gradually reduce inflation.\n  - Continued fiscal discipline and fiscal structural policies: maintain market confidence, ensure downward trajectory of the debt to GDP ratio, strengthen the budgetary process, increase transparency, improve budget composition, and allow expansion in social spending.\n  - Structural reform agenda: promote private sector investment and inclusive medium-term growth by reducing the role of the state in generating economic activity, leveling the playing field between state-owned enterprises and private companies, and removing barriers to trade."
    },
    {
      "heading": "Exchange rate policy and monetary policy",
      "content": "- Objective: value of the Egyptian pound to be determined freely against other currencies to:\n  - avoid build-up of chronic imbalance in demand for and supply of foreign currency;\n  - eliminate import shortages; and\n  - preserve foreign exchange reserves of the Central Bank.\n- Under a flexible framework one would expect two-way movements in the exchange rate as it appreciates or depreciates in line with economic conditions.\n- Expected outcome: once confidence in the framework is established, stronger investment inflows into Egypt are expected.\n- Monetary policy role:\n  - Restore price stability by tightening monetary policy or raising the policy interest rate.\n  - Monetary policy should remain data dependent; the policy rate should be used as the main instrument for reducing inflation and ensuring price stability.\n  - The Central Bank of Egypt has taken steps to improve transmission (example: moving subsidized lending schemes from the Central Bank to the government) so it can better use monetary policy to steer inflation."
    },
    {
      "heading": "Fiscal policy, public debt outlook, and social spending",
      "content": "- Fiscal consolidation aims to reduce debt without jeopardizing social support; objective is to expand social support programs while consolidating.\n- Fiscal targets and public debt projections:\n  - Sustained primary fiscal surplus of around 2.1 percent of GDP by fiscal year 2023-2024.\n  - About 2.5 percent thereafter.\n  - Reduction in the general government debt to around 78 percent of GDP by fiscal year 2026-2027.\n- Policy instruments and priorities:\n  - Revenue mobilization is key to create space for priority spending and targeted support for vulnerable populations.\n  - Authorities are open to using proceeds from state asset divestment to help reduce public debt further."
    },
    {
      "heading": "Structural reforms, state ownership policy, and level playing field",
      "content": "- State ownership policy:\n  - Sets out ambitious plans to reduce the footprint of the state and catalyze private sector investment.\n  - Establishes a clear framework for which sectors the state will reduce its presence in and how divestments will be implemented.\n  - Policy is endorsed at the highest level and will be made public; authorities commit to providing an annual report on progress and implementation.\n- Leveling the playing field:\n  - Annual reports on tax breaks, exemptions, and incentives will be published to increase transparency and help level the playing field so private firms are not disadvantaged.\n- Trade facilitation:\n  - Adoption of a risk based approach to customs procedures to help move traded goods through Egypt’s ports faster.\n- Structural reforms are expected to take time to implement and to deliver results in reducing vulnerabilities and strengthening the growth outlook."
    },
    {
      "heading": "Financing, financing gap, and disbursement schedule",
      "content": "- Financing gap and catalyzed financing:\n  - Financing gap presented in the Staff Report: about $17 billion for Egypt over the next four years.\n  - IMF financing is expected to close part of this gap and the IMF-supported program is expected to catalyze additional financing from multilateral institutions, bilateral partners, and private sector investors.\n  - Additional financing will include proceeds from planned sales of state-owned assets.\n  - The previously announced $5 billion in catalyzed financing refers to the first 12 months of the program.\n- Monitoring and disbursement schedule:\n  - The IMF-supported program will be monitored through semiannual reviews with disbursements distributed evenly over those reviews.\n  - Targets (performance criteria) are set on net international reserves, the primary fiscal balance, the non-accumulation of external debt payment arrears; additional targets on tax revenues, social spending, maturity of debt, total debt of the budget sector, and the overnight interbank rate.\n  - Test dates for targets: December 2022 and June 2023.\n  - First review expected to be completed in or around March 2023.\n  - Second review expected to be completed in or around September 2023."
    },
    {
      "heading": "Inflation, social protection, and targeted budget support",
      "content": "- Inflation context and outlook:\n  - Ongoing depreciation and high global commodity prices have put pressure on domestic prices, leading to higher inflation.\n  - IMF expectation: inflation to remain elevated during the current fiscal year, but to fall back to around 7 percent by fiscal 2024-2025.\n- Policy response to inflation:\n  - Primary tool to contain inflation is monetary policy (policy interest rate).\n  - Protect the vulnerable population with carefully targeted budget support that reaches those in need and only those intended to be compensated for the shocks.\n  - Authorities have already rolled out targeted budget support since the global commodity price shock."
    },
    {
      "heading": "Program monitoring, conditionality, and support",
      "content": "- Performance criteria and conditionality:\n  - Program performance is assessed against specific targets (performance criteria) on reserves, fiscal balance, external arrears non-accumulation, and additional quantitative and structural benchmarks.\n- Support and sequencing:\n  - The IMF stands ready to support the authorities in delivering reform priorities in the near-term and over the 46 month program duration.\n  - Discussions on climate policies that could be supported under a Resilience and Sustainability Trust for Egypt would be initiated in the context of the forthcoming review of the extended facility.\n\nTranscript of Press Conference on the IMF Program for Egypt — January 10, 2023, IMF Communications Department\n\n---\n\n\n References\n\n- Transcripts\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2023/01/10/tr011023-transcript-of-egypt-press-briefing"
    }
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    "Published: January 10, 2023",
    "Program duration: 46 month program duration.",
    "Program is anchored on three main pillars:",
    "Objective: value of the Egyptian pound to be determined freely against other currencies to:",
    "Under a flexible framework one would expect two-way movements in the exchange rate as it appreciates or depreciates in line with economic conditions.",
    "Expected outcome: once confidence in the framework is established, stronger investment inflows into Egypt are expected.",
    "Monetary policy role:",
    "Fiscal consolidation aims to reduce debt without jeopardizing social support; objective is to expand social support programs while consolidating.",
    "Fiscal targets and public debt projections:",
    "Policy instruments and priorities:",
    "State ownership policy:",
    "Leveling the playing field:",
    "Trade facilitation:",
    "Structural reforms are expected to take time to implement and to deliver results in reducing vulnerabilities and strengthening the growth outlook.",
    "Financing gap and catalyzed financing:",
    "Monitoring and disbursement schedule:",
    "Inflation context and outlook:",
    "Policy response to inflation:",
    "Performance criteria and conditionality:",
    "Support and sequencing:",
    "[Transcripts](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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