Egypt has not approached the International Monetary Fund (IMF) for emergency financing to help it fight the coronavirus pandemic, an IMF official said on Wednesday.
Under its Rapid Financing Instrument (RFI), the Washington-based lender is granting emergency loans to the countries that request the funding as the new coronavirus (COVID-19) threatens to push the economies worldwide deeper into recession.
“Egypt did not apply for any funding due to the emerging crisis of the COVID-19 pandemic,” IMF’s Director of the Middle East and Central Asia Department, Jihad Azour said in a teleconference that took place as the IMF-World Bank Spring Virtual Meetings.
IMF Egypt holding in-depth discussions
The Fund is holding in-depth discussions with the authorities in Egypt on the policies needed to contain the economic impacts of the pandemic, he noted.
“We’re in direct communication with the Central Bank of Egypt, Ministry of Finance and other Egyptian Ministries to give the technical advice on the measures that the state need to take this period.” Azour said.
The success of the Egyptian government in its economic reform programme, which initiated in 2016, enabled the country to withstand external pressures, given its strong reserves and big growth rate, as well as an efficient and effective banking sector, he added.
Coronavirus impact on Emerging Markets
The IMF official also said that Egypt is like many countries across the Middle East and North Africa (MENA) region, where their economic activities suffered due to the coronavirus crisis. At the same time, the Egyptian government put in place a range of measures to support the affected sectors in a very short time.
Middle East and Central Asia region countries have been hit by two large and reverberatting shocks, resulting in significantly weaker growth projections in 2020, Azour said, referring to the coronavirus crisis and the plunge in oil prices.
These shocks are causing economic turmoil across the region, he added. Fragile, conflict-affected nations are particularly hard-hit, given the already large humanitarian and refugee challenges, and weak health infrastructures.
According to the IMF’s latest projections, the entire MENA region will achieve an economic contraction of 3.3 percent during 2020.
On its World Economic Outlook Report released on Tuesday, the IMF trimmed its 2020 forecast for Egypt’s real GDP growth to 2 percent. However, the Fund said it expects Egyptian economy to maintain a positive growth of 2.8 percent in 2021.
“The economy of Saudi Arabia will shrink by 2.3 percent and the United Arab Emirates (UAE) by 3.5 percent in 2020, Qatar will record a contraction of 4.3 percent, Kuwait by 1.1 percent, Oman by 2.8 percent and Algeria by 5.2 percent all this year.” the Fund said in World Economic Outlook Report.
The Moroccan economy is expected to shrink by 3.7 percent, Tunisia by 4.3 percent, Jordan by 3.7 percent and Lebanon by 12 percent during 2020, the report added.
The immediate priority for policies is to save lives with required health spending, regardless of fiscal space. At the same time, they should preserve growth engines with targeted support to households and hard-hit sectors, Azour noted.
Coronavirus impact on global economy
According to the IMF, the global economic growth is expected to witness a sharp contraction of 3 percent in 2020 due to the spread of the coronavirus.
“The COVID-19 pandemic is inflicting high and rising human costs worldwide, and the necessary protection measures are severely impacting economic activity. As a result of the pandemic, the global economy is projected to contract sharply by –3 percent in 2020, much worse than during the 2008–09 financial crisis,” the report read.
However, the IMF report said in a baseline scenario, which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound, the global economy is projected to grow by 5.8 percent in 2021 as economic activity normalises, helped by policy support.
