IMF Approves Egypt's Final Tranche worth $1.7 Billion

The Executive Board of the International Monetary Fund (IMF) completed the second and final review of Egypt's economic reform program backed by a 12-month standby arrangement (SBA), allowing the authorities to draw the equivalent of $1.7 billion (SDR 1,158.04 million), bringing the total SDR purchases to approximately $5.4 billion.

The program aims to meet the balance of payments (BOP) needs arising from the pandemic's outbreak, support macroeconomic stability, and promote major structural reforms.

Egypt entered the COVID-19 crisis with sizable buffers, thanks to reforms implemented since 2016. Faced with unprecedented domestic and global uncertainty, the authorities’ policies struck a balance between ensuring targeted spending to protect necessary health and social expenditures and preserving fiscal sustainability while rebuilding international reserves.

IMF said in a report that the Egyptian authorities’ policies have struck a balance, during the COVID-19 crisis, between ensuring targeted spending to protect necessary health and social expenditures and maintaining fiscal sustainability while rebuilding international reserves.

IMF added that growth is expected to reach 2.8% in fiscal year 2020/21 and rebound strongly to 5.2% in FY2021/22, adding that the outlook remains blurry due to high public debt and overall financing needs.

"The Egyptian authorities have well managed the economic and social impact of the COVID-19 pandemic. Proactive economic policies have shielded the economy from the full burden of the crisis, and mitigated the health and social impacts of the shock while maintaining macroeconomic stability and investor confidence."

IMF directors commended satisfactory performance against fiscal targets, including spending on health and social protection, noting uncertainty remains high, stressing the importance of returning to the pre-COVID-19 primary surplus from fiscal year 2022/23 onwards.

The fund also welcomed the medium-term revenue strategy and the medium-term debt strategy.