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.