Based on Article 4 in the International Monetary Fund’s (IMF) regulations, Egypt’s government will invite the fund to assess the economic reforms before the country’s economic summit that is scheduled to take place in February 2015, Minister of Finance Hany Kadry Dimian said in a Friday statement.
Dimian stated that the article allows the IMF to evaluate the economic situation of nations and their budgets’ potential to serve the public debts.
The results of the IMF mission will be published before the summit in order to attract foreign investments whether they are direct investments, which benefit the economy, or indirect investments, such as investing in the stock market, the minister noted.
The economic summit, sometimes referred to as Partners of Development Conference, was originally called for by King Abdullah bin Abdulaziz Al-Saud of Saudi Arabia, following Abdel Fattah Al-Sisi’s formal announcement as Egypt’s new president in June, to discuss economic support for Egypt.
Egypt’s recent economic reforms have focused on reducing petroleum subsidies from EGP 134bn in the FY 2013/2014 budget to EGP 100.2bn in the current fiscal year budget. Reduction in public expenditure has prompted the government to increase the prices of automotive petroleum products, such as gasoline, diesel, and kerosene in the domestic market, with the aim of trimming the budget deficit by EGP 48bn, which is around 10% of GDP.
In April, the IMF’s Chief of Mission in Egypt Christopher Jarvis stated that, despite the aid packages the country had obtained from Gulf countries in 2013, the country still needs financial assistance from IMF or Arab countries in order to achieve economic prosperity.
Saudi Arabia, Kuwait, and the United Arab Emirates pledged a total of $12bn in assistance to Egypt after the ouster of former president Mohamed Morsi in July 2013. The influx of cash moved the country to suspend its two-year negotiations with IMF over a $4.8bn loan, according to former Minister of International Cooperation Ziad Bahaa El-Din.
Outlining the current economic challenges, Dimian said in his statement that the country’s economy is still suffering from a financial gap of around $11bn in order to drive GDP growth to 5% and 6% of GDP.
Dimian expected the GDP growth rates of the fourth quarter (Q4) of FY 2013/2014 to register 3.5% compared to 1% in Q1 of the same fiscal year.
The minister also pointed out an improvement of the economy represented by a 40% increase in the capital market of securities listed in the stock market, where it has jumped from EGP 357bn in July 2013 to EGP 524bn in August 2014.