Back to the complete issue
Monday, 7 October 2019

Egypt’s non-loan IMF program still “under consideration,” Maait tells Bloomberg

Non-loan IMF program still under consideration but nothing conclusive yet -Maait: Egypt is still looking at securing a non-loan program with the IMF, but future cooperation with the fund could also continue “under any form,” Finance Minister Mohamed Maait told Bloomberg TV on Thursday (watch, runtime: 2:47). The minister said that having a formal agreement with the IMF would be beneficial for investor sentiment and would provide “some sort of comfort” on Egypt’s economy. Maait said back in June that the government was hoping to close in on an agreement by October, but an IMF official said in July that any discussions on future engagement were contingent on the completion of Egypt’s current program of economic reforms.

Egypt’s priority remains staying the course of reform: IMF program or not, Maait stressed that the government is committed to pushing ahead with reforms and continuing to see the Egyptian economy “moving in the best way.” CBE Governor Tarek Amer said much the same at a presser on Thursday, telling reporters that Egypt is mainly looking to cooperate with the fund if it can provide further assistance with structural reforms, according to Reuters’ Arabic service.

The government is focusing on spurring private sector investments to create jobs outside the bloated public sector, Maait also told Bloomberg. He said he hopes to see the private sector account for 70% of Egypt’s GDP within 5-7 years, and that he would consider offering more incentives to meet this target. The minister stressed that creating jobs is a better antidote to the negative impact of reforms than working to shore up social safety nets.

What the IMF has to say: The IMF believes that Egypt has room for improvement when it comes to governance, incorporating women and the youth in its labor force, and curbing the government’s role in the economy, Egypt mission chief Subir Lall told Reuters. Lall did not confirm or deny whether the fund is officially engaged in talks with Egypt over a post-loan program.

Bloomberg, meanwhile, sees declining FDI as Egypt’s biggest economic challenge. “For all the money pouring into Egyptian bonds, it’s the trickle of longer-lasting commitments that’s keeping the economy vulnerable and feeding the discontent that spilled into last month’s protests against the government,” Paul Wallace writes. Net FDI fell in FY2018-2019 to USD 5.9 bn from USD 7.7 bn the year prior.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.