The recent increase on Egypt’s customs tariffs was not part of the International Monetary Fund (IMF) loan conditions, according to Jerry Rice, spokesperson of the IMF.
President Abdel Fattah Al-Sisi issued a decision last week to amend some of the customs tariff categories included in presidential Decree No.184 of 2013. The decision included non-essential goods.
Rice said in a press conference in Washington that the change in customs tariffs is compatible with Egypt’s obligations to the World Trade Organization (WTO), and that increasing custom duties on imports is not the optimal policy for improving the payments balance or the country’s financial situation.
Rebuilding the country’s foreign exchange reserves is one of the loan’s objectives, Rice told Daily News Egypt, adding that the recent increase in reserves is a result of external financial inflows obtained by Egypt from the IMF, World Bank, United Arab Emirates, and commercial banks.
The Central Bank of Egypt (CBE) announced on Monday that net foreign exchange reserves increased by roughly $4bn to register $23.05bn in November, compared to $19.04bn in October.
He added that those financial inflows assure foreign complementary finances which Egypt secured to bridge the public funding gap.
Before voting on Egypt’s loan request, the IMF stipulated that the country obtain $5-6bn of bilateral funds from supporting countries.
“Things will move forward in light of maintaining a flexible exchange rate, which is part of the objectives of the programme and determined by the market forces. It will improve the competitiveness of Egyptian exports and tourism, and attract foreign investment again. The CBE will be able to rebuild its international reserves,” Rice said.
He explained that in the next few days, the IMF will publish its staff report and Egypt’s letter of intent.
In November, the IMF agreed to lend Egypt $12bn over three years. The CBE already received the first tranche of $2.75bn.