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Thursday, 26 April 2018

Finance Ministry expects inflation rate to rise in July

EXCLUSIVE- Finance Ministry expects inflation to “slightly” and temporarily rise in July: The inflation rate could increase fractionally in July due to “a number of economic policies,” Vice Minister of Finance Mohamed Maait told Enterprise on Tuesday. While Maait declined to get into specifics, our take is that he was referring to plans to slash fuel subsidies 19.1% to EGP 89.08 bn and electricity subsidies 46.6% to EGP 16 bn next fiscal year, which will stall for a brief period the continued fall of inflation. Inflation has plunged from a high north of 35% in July 2017 to 12% in March 2018.

Maait sees the slight summertime uptick in inflation as temporary and expects inflation figures will continue to cool in April, May, and June.

IMF to conduct third review of the economic reform agenda in May: The IMF will be sending over a delegation on 1 May to conduct its third review of the Ismail government’s economic reform program, Maait tells us. The review, which will take place over the course of two weeks, will see the delegation meet with ministers, government officials, and civil society organizations, he added. The visit will unlock the next USD 2 bn tranche of the IMF’s USD 12 bn extended fund facility, which he expects will arrive sometime in June or July.

Expect the review to go smoothly, if the feedback the Egypt delegation got at the IMF and World Bank spring meetings is any indication. World Bank President Jim Yong Kim came out with a message of support for Egypt’s economic reforms in a tweet on Sunday. “I am glad to see Egypt’s recent economic reforms. The country’s progress presents an opportunity for more private sector-led job creation and growth and investments in quality,” he said. The IMF and World Bank both see Egypt’s GDP growing to 5.0% in FY2018.

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