Countries with large stakes in IMF need to give up part of their shares to help poorer, low-income countries
Egypt’s Minister of Finance Mohamed Maait has stated that Africa has huge development opportunities that need credit and financing facilities.
These opportunities can contribute to enabling the recovery of African economies from the impacts of the novel coronavirus (COVID-19) pandemic and restore growth rates.
Maait pointed out that assistance mechanisms to provide cash liquidity to African countries at a reduced cost are being considered.
There are also proposals to establish a $30bn Liquidity and Sustainability Fund from International Monetary Fund (IMF) reserves, providing African countries with low-interest financing to pay off their debts.
Moreover, the “Reduction of Poverty and Increased Growth Fund” would be established with capital of $100bn, to reinforce economic programs and activities that stimulate growth. This is in addition to $10bn that will be allocated to finance the purchase of vaccines against the coronavirus for Africa.
The minister’s remarks came on the sidelines of his participation as part of the official Egyptian delegation accompanying President Abdel Fattah Al-Sisi at the Paris Conference to Support the Transition in Sudan, and the Financing Africa Summit.
Maait added that he held a video conference meeting with his French counterpart Bruno Le Maire, in the presence of IMF and World Bank representatives, to propose ideas for the coming phase.
These proposals included increasing the percentage of African countries benefiting from the share of the IMF’s “special draw” to provide the necessary assistance mechanisms for providing cash liquidity to African countries. This is particularly as this percentage is estimated at only $33bn, a very small figure.
Maait added that many African countries have achieved negative growth as a result of the retraction of their economies and the impacts of the COVID-19 pandemic. This requires international concerted efforts.
Moreover, the global economy is intertwined and integrated, and such crises as the global health crisis affect the ability of any country to meet its liabilities. Furthermore, world economies will be exhausted following the pandemic, and might require special treatment through credit and financing facilities, and relieving debt burdens.
Countries with large stakes in the IMF might need to give up part of their shares to help poorer, low-income countries, as well as those who have been most affected, and which cannot easily obtain financing.
Meanwhile, Maait and Minister of Transportation Kamel El-Wazir held bilateral talks with Sudan to exchange experiences and to consolidate the foundations of the development partnership between the peoples of the River Nile Valley.
These bilateral relations will witness a strong start during the coming period, which will be reflected in the signing of many cooperation agreements, in order to support Sudan.
Maait said that Al-Sisi’s participation in the Paris Conference to Support the Transition in Sudan reflects Egypt’s keenness to support Sudan at all international forums.
It also shows that Egypt, in cooperation with its fellow Arab and international partners, seeks to drop Sudan’s debts owed to the IMF.
He pointed out that the Sudanese economy has not been dealing with international financial institutions for a while. This has affected it negatively, and it is currently going through a transformation phase in order to return to the global system.
The international community, donor countries, and international financial institutions must play a pivotal role in supporting the Sudanese economy in overcoming this very difficult stage.
In a different context, Maait pointed out that Egypt has been holding continuous meetings to assess the situation in the country. After many consultations, a balanced policy was chosen to deal with the health effects of the COVID-19 pandemic, keep the economy going, and avoid complete closure.
A total of EGP 100bn was allocated as a support package to the sectors and groups hardest hit by the pandemic. This aimed to preserve the economic gains achieved, in order to ensure the Egyptian economy avoided deflation.
Egypt occupies second place out of only 10 countries in the world that achieved positive growth at a rate of 3.6%. It also boasts a debt-to-GDP ratio that reduced from over 90% to 88%, in addition to the deficit dropping from 8.2% to 7.9%, with a first surplus of 1.8%.
Foreign exchange (FX) reserves have been kept at a good level, and there is stability in the currency and financial and economic policies despite the negative impact.
Maait added that all the arrears of export subsidies have been disbursed. Industrial sector gas and electricity prices have been reduced, whilst the real estate tax on the tourism sector has been eliminated.
He pointed out that Egypt benefited from the economic reforms during the “pandemic” period, which earned it the confidence of the world. It was also one of the few countries to avoid losing its classification among all international ratings agencies.
The IMF said that Egypt’s economic performance during the pandemic exceeded expectations, as it was able to achieve balance, meet citizens’ needs, maintain financial stability, and pay all liabilities during the crisis.