Egypt won’t need to tap lenders for the time being, says IMF
Egypt does not need additional external financing at the moment thanks to structural policy and fiscal reforms that have course-corrected the economy, IMF mission chief Celine Allard said yesterday during a virtual press conference, Masrawy reports. Egypt, which completed a three-year, USD 12 bn IMF program in 2019, again tapped the Fund last year as covid-19 hit. The government borrowed another USD 8 bn from the lender to shore up its finances and protect its economy from the economic shock caused by the pandemic. The sum included a USD 5.2 bn standby facility and a USD 2.8 bn “rapid financing instrument” to total USD 8 bn.
The USD 5.2 bn standby loan program is now over: The presser was held to answer questions on the disbursal of the USD 1.6 bn third and final tranche of the one-year package, which was approved by the IMF’s executive board last week. Approved in June 2020, the standby loan program has supported Egypt’s balance of payments through the worst of the pandemic and paid for vital health and social programs.
An exact date for disbursal remains unclear, but Finance Minister Mohamed Maait said on Wednesday that Egypt would not wait longer than a week to receive it.
The main challenges going forward: Egypt’s slow vaccine rollout and its potential impact on the recovery of the tourism sector, and the country’s high levels of public debt will present the biggest challenges to the government going forward, Allard said. Almost six months into the vaccination campaign, only 7% of eligible people have received one shot of a covid jab, something that will likely hold the tourism sector back from mounting a full recovery.
Egypt doesn’t think the tourism recovery is in jeopardy: Tourism revenues are now expected to come in somewhere between USD 6 bn and USD 9 bn in 2021, thanks to rising bookings from Eastern Europe and the Gulf, Tourism Minister Khaled El Anany said earlier this month. The announcement was an upwards revision of Egypt’s tourism revenue targets for 2021, which El Enany had last month put at USD 8 bn. Recovering arrivals are setting us on track to welcome a little over 6 mn visitors by the end of the year.
Next on the reform agenda? Allard said that the government now has to focus on further structural reforms to increase the role of the private sector in the economy — and work on reducing trade barriers to better integrate Egyptian companies into global markets. The government in April announced it would undertake a new round of structural reforms, one that it says will liberalize trade policy, upgrade infrastructure and improve market competition to raise exports and boost the private sector.