The last installment, worth $1.6 billion, is part of the SBA package to revive Egypt’s pandemic-hit economy
Egypt is expected to receive its third and final installment of its $5.2 billion one-year stand-by arrangement (SBA) with the International Monetary Fund (IMF) after passing its second and final review last night.
The last installment, worth $1.6 billion, is part of the SBA package to revive Egypt’s pandemic-hit economy.
Although still subject for approval by the IMF’s Executive Board, which is expected to take place in the coming weeks, the IMF staff team and Egyptian authorities reached a staff-level agreement announced the IMF yesterday.
The initial approval comes after several months of praises from the international fund including being called one of the fastest growing economies in the world by IMF’s managing director.
Ms. Celine Allard, who led the IMF team during a virtual mission from 4 to 24 May 2021 with the Egyptian authorities, highlighted that Egypt’s "strong performance and commitment helped achieve the program's objectives of maintaining macroeconomic stability during the pandemic while protecting necessary social and health spending and implementing key structural reforms”.
Related > Egypt ranked as 2nd top Arab economy: IMF
The mission held discussions on the 2021 Article IV Consultation with Egypt and the second review of Egypt’s economic program supported by the IMF’s 12-month SBA.
The fund continued to praise the government’s efforts, highlighting the economy’s “resilience” over the past several months, due to the “strong implementation” of its policy program.
The $5.2 billion one-year SBA was approved back in June 2020, a financing package meant to support Egypt’s economic recovery through the pandemic’s effects on certain key sectors such as tourism and healthcare.
All structural benchmarks were met including further advancing reforms related to fiscal transparency and governance, social protection, and improvement in the business environment, while continuing efforts directed towards reducing debt vulnerabilities and creating more budget space for priority spending, according to Allard in an IMF statement.
“Growth is expected to be 2.8 percent in FY2020/21, rising to 5.2 percent in FY2021/22. However, uncertainty remains against the backdrop of lingering pandemic-related risks,” said Allard.
“Policies are appropriately focused on supporting the recovery in the near term while deepening and broadening structural reforms to unleash Egypt’s enormous growth potential in the medium term,” Allard expounded,” she added.
On fiscal policy, the IMF team lead noted that in the coming FY2021/2022, policy has appropriately targeted a gradual consolidation to balance needed support for the economic recovery while safeguarding fiscal sustainability.
