Monday, 06 December 2021 08:50 GMT

IMF gives Egypt strong marks in third programme review


(MENAFN- Khaleej Times) The International Monetary Fund maintained a favourable outlook for Egypt's economy in its third major review of the country's loan programme but warned against the risks of rising fuel prices and an investor exit from emerging markets.

The three-year $12 billion loan programme agreed in late-2016 and aimed at drawing back investors that fled after its 2011 uprising has obliged Egypt to undertake tough reforms such as slashing energy subsidies, imposing new taxes, and floating its pound currency.

The fund maintained its previous 5.5 per cent projection for Egypt's GDP growth in the 2018-19 fiscal year, supported by a recovery in tourism and rising natural gas production.

The country raked in $2.27 billion in tourism revenues in the quarter from January-March, the latest available data from the central bank showed.

The fund said that should help Egypt reduce its overall current account deficit to 2.6 per cent in 2018-19, down from a previous projection of four per cent.

The IMF estimated that Egypt would face a financing gap of $1 billion for the year, which it could plug through either a Eurobond or its own reserves, suggesting that Egypt could tap international markets again this year.

It said external debt was likely to rise to $91.5 billion from a previous projection of $85.2 billion in its second review.

Inflation has soared in the import-dependent country after it floated its currency in late-2016, hitting over 30 per cent last year, but price rises have cooled in recent months. Recent IMF-backed cuts to energy subsidies have pushed inflation back up however, to 14.4 per cent in June from 11.4 per cent in May. The fund expects average inflation for the 2018-2019 fiscal year to be 14.4 per cent, and urged tight monetary policy to keep a lid on prices.

EGPC to raise $1B

Meanwhile, Egyptian General Petroleum (EGPC) has hired HSBC to arrange a loan of around $1 billion, five banking sources familiar with the matter said, the latest sign of international banks' increased appetite for Egyptian debt.

Two of the sources said the loan was being requested by Petroleum Export Limited, a special purpose vehicle used by EGPC, to raise several loans in the past.

Egyptian oil ministry spokesman Hamdi Abdelaziz dismissed the report and said, "there were no deals concluded through the current financial year and until now".


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