The Egyptian government said the IMF’s Friday announcement on the approval of a new $3bn loan confirms the support of the international community and development partners for the Egyptian economic reform programme
In a Saturday statement, the cabinet added that the loan reflects confidence in Egypt’s capabilities to fulfil its international obligations and its ability to achieve the targeted economic growth rates.
“The fund’s board of directors’ approval of the experts’ report, which was agreed upon with the Egyptian government and the Central Bank of Egypt last October, without any additional conditions or burdens, adds to the Egyptian economy a new certificate of confidence and also gives a positive signal to the domestic and foreign markets, and gives a strong impetus to encourage investments, exports, and international trade with Egypt.”
The statement indicated that the authorities’ economic programme supported by the EFF arrangement envisages the implementation of a comprehensive policy package to preserve macroeconomic stability, restore buffers, and pave the way for sustainable, inclusive, and private-sector-led growth.
The programme also works to enhance the Egyptian economy’s resilience and ability to face external shocks, which have recently increased in severity and frequency at the global level, through adopting a flexible exchange rate regime to increase resilience against external shocks and to rebuild external buffers.
The comprehensive national economic reform programme for Egypt also includes an additional pillar linked to strengthening the social safety net to protect the vulnerable.
The reform programme also includes accelerating efforts to increase the competitiveness of the Egyptian economy by de-ranging structural reforms to reduce the state footprint, level the playing field across all economic agents, facilitate private-sector-led growth, and strengthen governance and transparency in the public sector.
Regarding fiscal policy, the Egyptian government aims to continue its efforts to maintain fiscal discipline by achieving a primary surplus in the general budget. This will enable it to reduce government indebtedness to less than 80% of GDP in the medium term.
The Cabinet’s statement indicated that the Egyptian government has responded quickly to the directive of President Abdel Fattah Al-Sisi regarding the provision of sufficient and appropriate funding to expand social protection programmes to ensure the provision of the greatest degree of support and protection to the targeted groups.
“The Egyptian government has approved a social protection package at an annual cost of approximately EGP 70bn, represented by approving an additional allowance of EGP 300 per month for all workers in state agencies and for pensioners, who amount to about 10 million pensioners,” the Cabinet’s statement read.
The government also announced, earlier, the extension of the period of benefiting from the additional monthly increase scheduled for ration card holders until the end of the current fiscal year ending in June 2023, to provide them with additional cash support that guarantees the ability to provide the basic needs of their families.
Likewise, a decision was taken to keep the electricity price the same without any amendment until the end of FY2022/23. In addition, the announcement included the provision of port space for several companies to ensure a stable order for citizens.
On the side of structural measures and reforms, the Egyptian government’s programme includes wide-ranging structural reforms to reduce the state footprint, level the playing field across all economic agents, facilitate private-sector-led growth, and strengthen governance and transparency in the public sector.
In this context, the reform plan includes the speedy issuance and announcement of the “State Ownership Policy Document” in its final form, to confirm the desire of the Egyptian state and its institutions to encourage and attract the private sector, aim to increase its investments and its strong presence in the Egyptian market, and increase its strong contribution to economic growth in the coming period.
The Egyptian government’s plans also include working to enhance the environment for fair competition. In addition, they will simplify trade and investment procedures to attract more domestic and foreign investments to the Egyptian market.