IMF: Egypt’s Expatriate Remittance Inflows Remained Strong in H2 of 2022

Expatriate remittance inflows remained strong in the middle of last year in most emerging and middle-income market economies in the Middle East and Central Asia, including Egypt, Jordan, Morocco and Pakistan, the IMF said.

The IMF confirmed in the May edition of the Regional Economic Prospects Report for the Middle East and Central Asia, which was revealed on Wednesday, that the expansion of lending to the private sector “non-financial companies and households” continued in real terms in some emerging and middle-income market economies, recording two-digit growth of “approximately 10% in Egypt.”

The fund attributed this in part to the spread of subsidised lending initiatives in the second half of last year 2022.

The Central Bank of Egypt (CBE) had previously announced that the remittances of Egyptians working abroad recorded during the period from January to the end of August 2022 about $20.9 billion, compared to about $21.4 billion during the same period of the previous year.

CBE announced today that the remittances of Egyptians working abroad amounted to $12 billion during the first half of the current fiscal year 2022/23 (July-December).

In a related context, the Fund stressed that the economies of the Middle East and Central Asia proved solid in 2022 despite a series of global shocks.

However, growth is expected to slow this year – and possibly next – in the MENA region as restrictive policies to combat inflation, reduce vulnerabilities and rebuild buffer reserves begin to make a tangible impact on economic activity in many countries, and planned oil production cuts begin to curb growth in oil-exporting countries. Inflation is expected to remain persistent.

According to the IMF, the outlook for the economy in the Caucasus and Central Asia depends heavily on external factors, in particular the impact of monetary tightening, growth in its most important trade partner countries, the pace of private transfers, and migrant labour flows from Russia.

Uncertainty is characterised by rising, and the risks surrounding the underlying scenario tend to be downside amid financial stability concerns – especially in advanced economies against the backdrop of contagion concerns.

Policy trade-offs are more complex, and policymakers in the region’s countries will have to carefully calibrate the policy mix to lower core inflation without causing fiscal pressure and over-escalation.

In addition to continuing to provide targeted financial support to vulnerable groups in society while maintaining debt sustainability and financial stability, tough monetary and fiscal policies across the region amid tightening global financial conditions require accelerating the implementation of structural reforms to support possible growth and boost resilience.