Kristalina Georgieva, IMF Managing Director and Chair, highlighted Egypt’s macroeconomic challenges exacerbated by the regional unrest and disruptions in the Red Sea impacting Suez Canal receipts.
In an IMF report on Egypt’s economy, Georgieva praised Egypt’s efforts to strengthen its reform package and emphasised the importance of sustaining these measures.
“The authorities have significantly strengthened the reform package underlying the Extended Fund Facility arrangement, supported by an augmentation of access. Recent measures towards correcting macroeconomic imbalances, including unification of the exchange rate, clearance of the foreign exchange demand backlog, and significant tightening of monetary and fiscal policies, were difficult. Still, critical steps forward, and efforts should be sustained going forward” She stated.
Moreover, the commitment to utilise new financing to bolster reserves, clear foreign currency backlogs, and reduce government debt was deemed prudent.
Policies aimed at macroeconomic stability while protecting vulnerable groups were applauded, including the focus on reducing inflation and implementing fiscal consolidation.
Furthermore, Georgieva stressed the need to replace untargeted fuel subsidies with targeted social spending. Accelerating structural reforms to promote inclusive growth, including reducing state and military involvement in the economy, was emphasised.
Risks include external uncertainties and domestic challenges in maintaining liberalised exchange rates, tight monetary and fiscal policies, and managing capital inflows prudently to curb inflation and external pressures.
