IMF maintains support for Egypt’s resilience, reform efforts

The International Monetary Fund (IMF) will continue its support for Egypt’s resilience and reform efforts to maintain economic stability, Julie Kozack, the Fund’s Communications Department Director said yesterday.

Speaking at a press briefing, she said the IMF’s Managing Director, Kristalina Georgieva, had a very constructive visit to Egypt, which underscored the IMF support for Egypt’s resilience and reform efforts to maintain economic stability.

Kozack said the economic outlook for Egypt remains challenging and the authorities have taken key reforms, they have implemented key reforms to preserve macroeconomic stability, she added.

“It will be important for Egypt to continue to maintain a strong fiscal discipline to reduce public sector debt vulnerabilities. Very importantly, enhancing private sector growth and accelerating divestment plans to speed up reforms to level the playing field and reduce the footprint of the state and the economy will be important,” Kozack noted.

“Raising sufficient revenue for essential programs, particularly health, education and social safety nets is also going to be critical,” she said, noting that reforms will also need to focus on enhancing tax equity, broadening the tax base and reducing tax exemptions rather than increasing tax rates.

She has underlined that strengthening the country’s social safety nets to protect vulnerable groups from the rising cost of living, energy price hikes and other issues will be essential.

“In March 2024, just six or so months ago, the IMF increased its support for Egypt by raising the loan amount from $3 billion to $8 billion. We also recently undertook a reform to our surcharge policy and that is saving Egypt $800 million over the next six years under this new policy,” Kozack said.

Ivanna Vladkova Hollar, IMF Mission Chief for Egypt, said the most populous Arab country has enormous economic growth potential.

“The Egyptian authorities and IMF staff have made substantial progress on policy discussions toward the completion of the fourth review under the Extended Fund Facility (EFF),” Hollar said last week.

Hollar said the Egyptian authorities have implemented key reforms to preserve macroeconomic stability. The unification of the exchange rate since March has eliminated the backlog of foreign exchange demand and eased imports.

“The [IMF] mission and the authorities agreed that tax policy reforms will help Egypt succeed in its domestic revenue mobilization efforts, to generate adequate fiscal space to finance much needed expenditure programs (especially in health, education and the social safety net) while reducing debt and debt service,” she added.