The IMF and the World Bank praised Egypt’s economic reform programme on the sidelines of the annual meeting of the International Monetary Fund (IMF) and the World Bank in Washington, D.C.
Meanwhile, World Bank President Jim Yong Kim said that Egypt’s economic reform programme is moving on the right track at a press conference last Thursday on the sidelines of the IMF and World Bank annual meeting.
Kim added that as a result of the economic reforms, especially the step of reducing subsidies, Egypt’s government implicitly saved about $13bn for low-income citizens.
Kim stressed that the reforms made investors more confident in the Egyptian economy.
On the other hand, IMF Mission Chief to Egypt Subir Lall said that the performance of the Egyptian economic programme has started well and that the authorities are moving in the correct path to implement it. He added that inflation has begun declining and is on its way to being in the single digit region.
Moreover, Lall said that the next stages will witness a decline in Egypt’s debt level, pointing out that achieving further growth will create more jobs.
“We are confident that there are resources in the local market, and we will be in Cairo at the end of October for conducting the second review of the economic reform programme,” Lall said.
On the same context, the IMF’s director for Middle East and Central Asia Department, Jihad Azour, said that the IMF delegation that will conduct a second review of the reform programme will arrive in Cairo on 25 October and will stay until 7 November.
Egypt signed an agreement with the IMF last November to allow $12bn and received two tranches of the loan worth $4bn over the year.
It is expected that the reviews will allow disposing of the next loan tranches.
“The timetable on the next round of subsidy cuts will be left to the government’s discretion,” said Azour.
In the same context, Azour stressed that the fund is now discussing that timetable with the Egyptian cabinet.
World Bank expects Egypt’s budget deficit to decline to 8.8% of GDP in FY 2017/18
The world Bank expected that Egypt’s budget deficit will decline to 8.8% of GDP in fiscal year (FY) 2017/18.
Meanwhile, Egypt’s GDP growth is predicted to stand at 4.5% in FY 2017/18 and to grow gradually to reach 5.3% by 2019, the World Bank noted
In the same context, the World Bank said that inflation will decrease to 23.3% this FY and to 22.1% in FY 2018/19. It is expected to fall to 14% by 2019.
Moreover, the bank noted in its report that if the same inflation rate continues, Egypt would have to tighten its fiscal policy, which will affect economic growth.
Meanwhile, the bank also warned against slowing down the pace of economic reforms so as not to affect Egypt’s credit ability in repaying international debts.
IDB prepares cooperation strategy with Egypt with total funding worth $3bn until 2020
The Islamic Development Bank (IDB) is preparing a new cooperation strategy with Egypt with a total funding of $3bn for three years from 2018 to 2020, according to IDB President Bandar Al Hajjar.
This came during his meeting with the Minister of Investment and International Cooperation Sahar Nasr on the sidelines of the annual meeting of the IMF and the World Bank in Washington, D.C.
During the meeting, the two sides discussed the procedures of establishing a Cairo office for the bank, increasing the bank’s support for a number of future projects in Egypt.
Moreover, they also discussed supporting entrepreneurship projects and innovative projects through investing in the Egyptian entrepreneurship programme.
On the other hand, the minister invited the president of the IDB to participate in investing in the 2017 Sustainable Development in Africa Conference, which will be held from 7 to 9 December.
In the same context, Al Hajjar confirmed his intention to participate in the conference.
In another context, Chairperson of the Arab Fund for Economic and Social Development Abd El Latif Youssef El Hamad stressed on the fund’s readiness to support the education and the transportation sectors in Egypt in cooperation with the Ministry of Education and the Ministry of Transportation. This came during his meeting with Nasr.
The two sides discussed the fund’s support for “your idea is your company” initiative to support startup companies and to encourage the private sector to invest in several projects.
In the same context, El Hamad stressed the fund’s keenness to support entrepreneurship.
The Minister of Investment and International Cooperation discussed with the secretary general of the British Department for International Development, Nick Dyer, the activation of the declaration of intent signed on 8 March between Egypt and the UK, which stipulates that the latter intends to provide $150m to support the economic and social reform programme and $18m to support the social safety net.
This came on the sidelines of the annual meeting of the World Bank in Washington, D.C.
Dyer explained that UK has expanded its support to Egypt through the Arab partnership programme.
Moreover, he said that Egypt has received £6m through projects directly managed by the British embassy in Cairo and £17m from the activities in Egypt through regional projects run by London.
Meanwhile, during their meeting with Nasr, the executive chairperson of HSBC, Samir Assaf, and the chief executive for HSBC, Georges Elhedery in the Middle East and North Africa, stressed that the bank considers Egypt as one of the most important growing markets all over the world.
The two sides discussed cooperation to increase the bank’s investments in Egypt during the coming period.
In the same context, he pointed out the bank is committed to its long-term investment plan to grow its business in the Egyptian market.
Finance Ministry aims to issue dollar-dominated bonds in Q1 2018
Egypt aims to begin its new bond programme with dollar-denominated bonds before moving onto euro-denominated ones in the first quarter (Q1) of 2018, Minister of Finance Amr El-Garhy said in an interview with Bloomberg.
He added that the ministry is still in talks with investment banks to outline the bond sale, while it is expected to start the selection of the overseas bond managers between the second half (H2) of October or during the first week of November.
Egypt awaits to receive the third tranche ($2bn) of the IMF’s $12bn loan after the end of the review to be held by the fund between the last week of October and the first week of November over the latest developments of the country’s economic reform programme, El-Garhy said during an interview with CNBC Arabia on Thursday on the sidelines of the autumn meeting of the IMF and the World Bank.
Egypt reached an agreement with the IMF in August 2016 on a loan worth $12bn over three years. The country received the first $2.75bn tranche in November 2016.
In its agreement with the IMF, Egypt pledged to develop a roadmap for social protection schemes, including a plan to ease the programme’s negative impact on the most vulnerable groups by strengthening social protection measures.
The agreement set a target of EGP 87.1bn for social protection schemes for 2016/17 and 2017/18, the first two fiscal years in the programme, according to the IMF documents concerning the loan to Egypt.
Therefore, President Abdel Fattah Al-Sisi announced an EGP 75bn social spending increase as part of a wider social protection scheme intended to absorb the expected impact of ongoing reform measures.
El-Garhy also noted that the government doubled allocations for social protection programmes during the current FY 2017/18. Regarding taxes, the minister pointed out that the existing tax policy is very stable especially after the application of the VAT Law. He added that the government expects that the taxes would record about 13.5-14% of GDP during FY 2017/18, according to a statement issued by the Ministry of Finance.
He pointed out that international bonds are part of a broader plan to diversify state revenue resources in an effort to reduce the budget deficit and meet foreign debt obligations. To that end, the government intended to extend its $2bn repurchase agreement (Repo) with a group of international banks for another year. These banks offered last month to raise the value of the bonds issued by Egypt to $5bn and extend their maturity to five years instead of one.
El-Garhy said during his meeting with investors of Standard Bank in Washington that the government plans to reduce the annual budget deficit by 1-1.5%, seeking to reach 4-5% by 2022, according to a statement by the ministry.
AmChamber Egypt to meet finance, investment ministries in New York
The American Chamber of Commerce in Cairo and EFG Hermes will hold on Monday a luncheon in New York, where they will host Egyptian Minister of Investment and International Cooperation Sahar Nasr and Minister of Finance Amr Al-Garhy, according to a statement issued by the chamber.
Both ministers are scheduled to deliver important speeches during the ceremony, which will be followed by several discussions.
Karim Awad, CEO of EFG Hermes, will moderate one of the discussions that will involve El-Garhy and representatives of the Bank of New York Mellon and Citigroup incorporation.
Moreover, El-Garhy is scheduled to attend another discussion with a number of international banks and investment funds in London organised by CI Capital this week, according to a statement issued by the Ministry of Finance.
CI Capital has organised a discussion session last week in Washington attended by El-Garhy and included a group of international banks and investment funds, whose assets amount to about $280bn.
On the other hand, Egypt expects another visit by a large delegation of major US companies next month to discuss injecting new investments in Egypt in light of the new opportunities being announced.
The Ministry of Investment and International Cooperation began arranging the visit after Al-Sisi met with representatives of a group of major American companies in New York on the sidelines of the 72nd session of the United Nations General Assembly (UNGA 72).
The US delegation would include companies operating in the fields of infrastructure, energy, healthcare, tourism, food industries, technology, engineering, ICT, and several international investment funds.
Meanwhile, the Egyptian-US Business Council will meet with a delegation of US companies in November to discuss increasing investments in Egypt. In addition, the American Chamber of Commerce will organise an investment forum in Egypt for US investors next year.