Egypt’s Minister of Finance Mohamed Maait has said that the Egyptian Government’s policy of creating harmony between fiscal and monetary policy has helped reduce the negative impacts of the novel coronavirus (COVID-19) pandemic.
He also said that the recent approval given by the International Monetary Fund’s (IMF) Board of Directors to the second review of the credit readiness agreement is evidence on Egypt’s very strong policy performance under the programme.
The second review will see the disbursal of the last tranche of the credit readiness programme estimated at about $1.7bn of the programme’s total amount, estimated at $5.4bn. It is also the concluding element of the Article IV consultations for the year 2021.
In a statement on Thursday, Maait said that Egypt is moving forward strongly in the reform and development process, by achieving balance and flexibility between the economic and financial policies adopted.
These contribute to strengthening the structure of the national economy in a way that has given it a measure of strength and solidity in dealing with internal and external shocks.
The minister added that the harmony between the fiscal and monetary policies pursued by the government, under the directives of Egypt’s political leadership, have helped reduce the negative repercussions of the COVID-19 pandemic.
He said that Egypt has attracted much international praise for quickly dealing with the repercussions of the global health crisis. It has done so by delivering a strong performance by implementing all the targeted reforms on time, for which it has received the praise of IMF’s the Executive Board.
He said that the Egyptian Government’s ability to achieve balanced financial results during fiscal year (FY) 2020/21, and achieve better than the target of the credit readiness programme reflected well on the country.
IMF experts expected the economy to achieve a primary surplus of about 1% of GDP during the current fiscal year, compared to the fund’s previous targets of about 0.5% of GDP. This came despite the expansion of spending on social programmes, and the increase in spending on the health sector that exceeded the targets and estimates agreed upon within the fund’s programme.
He pointed to the Ministry of Finance’s success prolonging debt life by increasing the net domestic issuance of long-term bonds. This aimed to achieve more than 100% by the end of March 2021, compared to the IMF programme’s target of 70%.
This was in addition to declining inflation rates, stabilising the level of local prices, and having a balance of adequate foreign exchange (FX) reserves with the banking sector.