The International Monetary Fund (IMF) mission will begin an official visit to Egypt on Tuesday for the second review of the Egyptian government’s economic reform program.
The Ministry of Finance said that negotiations will be held with the government economic team within the framework of the annual review of the economic reform program and the policies and decisions that have been taken in preparation for a recommendation for the disbursement of the third tranche of the loan to Egypt.
Egypt has so far received two tranches from the IMF loan worth $4bn, including $2.75bn at the end of 2016 then a second tranche worth $1.250bn after the first review in July this year.
Egypt is expected to receive the third tranche worth $2bn before the end of the year.
Minister of Finance Amr El-Garhy and Governor of the Central Bank of Egypt (CBE) Tarek Amer met with Christine Lagarde, Managing Director of the IMF on the sidelines of the joint annual meeting of the IMF and the World Bank. According to a statement from the ministry, Lagarde congratulated the Egyptian people and government for their successful implementation of the ambitious national economic reform program.
“What has been implemented so far of the reforms in the Egyptian economic reform program will bear the desired fruits,” she said, adding that the government and the CBE have managed to curb inflation and bridge the budget deficit to put Egypt back on the track for growth and stability.
She noted that the IMF looks forward to continuing the partnership with Egypt to help unleash the economic potential and achieve higher and more inclusive growth that will pay off to all Egyptians.
Sources said that the IMF delegation will discuss during the second review with the Egyptian administration, restructuring fuel subsidies plan and the timing of government lifting all fuel subsidies, since – despite moving energy prices twice – the government still subsidizes their prices.
El-Garhy said that Egypt has succeeded in achieving more than 80% of the difficult decisions of the economic reform program by restructuring the subsidy program for fuel, electricity and supplies, and the liberalization of the pound exchange rate.
In addition to the application of the value-added tax by 14%, next to curbing the budget deficit to 10% of the GDP.
Moreover, he said that the IMF mission will meet with a number of Egyptian officials to discuss the reform program during its presence in Cairo in the period from 24 October to 3 November.
In a related context, El-Garhy penned an op-ed for the Financial Times before the IMF mission arrives this week.
He discussed the reforms implemented by Egypt in the past two years, stressing that despite the short-term pressures and pains associated with the economic reforms, the country is beginning to reap its benefits.
He pointed out that the reduction of subsidies, the decision to float the Egyptian pound, the adoption of the new investment law and industrial licensing law, have all contributed to the achievement of strong economic growth by 4.1% in the fiscal year 2016/2017, expecting growth of over 5% in the coming fiscal year, and to return to the same rates before 2011 by 2019.
He added that the government has to continue improving the economic climate, and to be attentive to public spending, and support the ability of the private sector to lead the economic growth.