{
  "title": "Transcript of Press Conference with IMF Mission Chief of Egypt",
  "publication": "IMF News, April 1, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/04/01/tr040124-transcript-of-press-conference-with-imf-mission-chief-of-egypt",
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  "summary": "Transcript of Press Conference with IMF Mission Chief of Egypt",
  "publishDate": "2024-04-01",
  "sections": [
    {
      "heading": "Program augmentation, tranches, and review timetable",
      "content": "- IMF Executive Board completed the first and second reviews of the Extended Fund Facility for Egypt and approved an augmentation of the original program by about $5 billion to $8 billion in total.\n- The decision allows the authorities to immediately draw the equivalent of about $820 million.\n- Next (third) review: expected to be completed and considered by the IMF Executive Board by end June 2024.\n  - The third review is expected to unlock $820 million (subject to completion of review conditions).\n- Reviews four through eight: scheduled every six months thereafter, with each disbursement currently programmed to be about $1.3 billion.\n- The last review under the program is scheduled for the fall of 2026.\n- Staff note: tranche sizing considered timing and size of balance of payments needs and availability of other financing."
    },
    {
      "heading": "Economic stabilization plan — design and near-term implementation",
      "content": "- Core elements of the authorities’ stabilization plan:\n  - Liberalized foreign exchange system in the context of a flexible exchange rate regime.\n  - Significant tightening of both fiscal and monetary policy to support the adjustment in the exchange rate.\n  - Reduction in public investment, broadly defined.\n  - Implementation of reforms to allow the private sector to become the engine of growth.\n- Authorities committed to use a large part of new financing to:\n  - Improve the level of reserves.\n  - Fast track clearance of foreign currency backlogs and arrears.\n  - Reduce government debt upfront.\n- Rationale: saving proceeds to bolster buffers and reduce vulnerabilities is described as \"prudent and the right choice.\""
    },
    {
      "heading": "Growth, inflation, and macro projections (staff statements)",
      "content": "- Real GDP growth:\n  - Forecast for current fiscal year (ends end-June): lowered to 3 percent.\n  - Projected rebound for fiscal year 2024-2025: upgraded to just under 4.5 percent.\n- Inflation:\n  - Inflation is expected to remain high in the very near term.\n  - Forecast for next fiscal year: \"on average about 25.5 percent and 15 and a quarter on for the end of the period at the end of next fiscal year.\"\n  - Near-term inflation uncertainty noted due to possible pass-through from exchange rate unification and recent appreciation trends in the official currency.\n- Detailed debt and other projections: to be published in the IMF staff report in the coming days (per the transcript)."
    },
    {
      "heading": "Fiscal policy, subsidies, and debt strategy",
      "content": "- Fiscal stance:\n  - Fiscal consolidation envisioned as revenue-based, broadening the revenue base to put debt on a downward path.\n  - Resources to be reallocated to expand social safety nets and priority expenditure (education and health).\n- Energy subsidies:\n  - IMF advice: replace untargeted fuel subsidies with targeted social spending; use fuel price adjustment mechanism proposed by authorities.\n- Use of Ras El-Hekma proceeds:\n  - Authorities committed to save a significant portion in gross international reserves and to use 50 percent of the local currency value of proceeds to reduce public debt.\n  - Ras El-Hekma cited as easing near-term external financing pressures but prudent use remains critical."
    },
    {
      "heading": "Monetary policy, reserves, and capital controls",
      "content": "- Central Bank of Egypt (CBE) policy guidance:\n  - CBE resolve to focus on reducing inflation and to tighten further, if necessary, is key.\n  - It is \"perhaps a bit early\" to discuss an easing cycle; decisions should be data-driven with readiness to tighten if inflation pressures persist.\n- Capital controls / FX access:\n  - Key reform: ensure FX market functions so price of foreign exchange is market-determined and available to private sector firms and individuals.\n  - Program expectation: avoid return to FX rationing and restricted FX availability."
    },
    {
      "heading": "Structural reforms, state ownership, and private sector role",
      "content": "- Structural priorities:\n  - Withdraw the state and military from economic activity as per the authority's state ownership policy.\n  - Ensure public sector firms are not given competitive advantage over private sector firms; create a level playing field to attract domestic and foreign private investment.\n- Monitoring:\n  - Authorities and IMF staff are developing an indicator to jointly track progress in reducing the role of the state and advancing a level playing field; details to be available in the forthcoming Staff Report."
    },
    {
      "heading": "Capital inflows, portfolio flows, and resilience to shocks",
      "content": "- Capital inflows:\n  - Recent improvement in outlook has started to attract capital inflows (including FDI); continued policy implementation is important to sustain inflows.\n  - Authorities urged to manage inflows carefully to maximize benefits while maintaining macroeconomic stability.\n- Building resilience to global shocks:\n  - Recommended tools: build foreign exchange reserves, reduce public debt, improve quality of public expenditure, and use targeted transfers to protect households.\n- RSF (Resilience and Sustainability Trust) request:\n  - RSF is separate from the EFF; Egypt has requested access under RSF to address climate policies.\n  - Discussion of RSF policies with authorities expected alongside the third review (next three months); Executive Board approval required for access.\n\nTranscript of Press Conference with IMF Mission Chief of Egypt — April 1, 2024.\n\n---\n\n\n References\n\n- Arab Republic of Egypt and the IMF\n- Transcripts\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/04/01/tr040124-transcript-of-press-conference-with-imf-mission-chief-of-egypt"
    }
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    "Published: April 1, 2024",
    "IMF Executive Board completed the first and second reviews of the Extended Fund Facility for Egypt and approved an augmentation of the original program by about $5 billion to $8 billion in total.",
    "The decision allows the authorities to immediately draw the equivalent of about $820 million.",
    "Next (third) review: expected to be completed and considered by the IMF Executive Board by end June 2024.",
    "Reviews four through eight: scheduled every six months thereafter, with each disbursement currently programmed to be about $1.3 billion.",
    "The last review under the program is scheduled for the fall of 2026.",
    "Staff note: tranche sizing considered timing and size of balance of payments needs and availability of other financing.",
    "Core elements of the authorities’ stabilization plan:",
    "Authorities committed to use a large part of new financing to:",
    "Rationale: saving proceeds to bolster buffers and reduce vulnerabilities is described as \"prudent and the right choice.\"",
    "Real GDP growth:",
    "Inflation:",
    "Detailed debt and other projections: to be published in the IMF staff report in the coming days (per the transcript).",
    "Fiscal stance:",
    "Energy subsidies:",
    "Use of Ras El-Hekma proceeds:",
    "Central Bank of Egypt (CBE) policy guidance:",
    "Capital controls / FX access:",
    "Structural priorities:",
    "Monitoring:",
    "Capital inflows:",
    "Building resilience to global shocks:",
    "RSF (Resilience and Sustainability Trust) request:",
    "[Arab Republic of Egypt and the IMF](http://www.imf.org/external/country/EGY/index.htm)",
    "[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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