Finance Minister Amr el-Garhy meets with IMF Managing Director Christine Lagarde- press photo
CAIRO – 26 October 2017: The International Monetary Fund (IMF) loan will be directed towards financing the budget deficit, where the Central Bank of Egypt (CBE) will take the equivalent amount in foreign currency to support its international reserves, Ahmed Kojok, Deputy Minister of Finance, said in a Thursday statement.
The statement comes in light of the current IMF delegation visit to Cairo to start the second review of Egypt’s reform program, before it disperses the third installment of a $12-billion loan program. The visit started on Tuesday and will last until November 3.
Kojok said that Egypt’s homegrown reform program, on which the IMF agreed upon, aims to achieve a 5.5 percent growth rate by financial year 2018/2019, which will help decrease unemployment rate, increase exports, improve investment climate and reduce the budget deficit.
He added that the program aims to improve the state’s financial capacities in order to increase spending on health, education and infrastructure sectors. It also targets the development of slums and underprivileged areas as well as transport and sewage systems, among others.
Freeing up resources will also be used to expand the social security programs, especially cash programs, and subsidizing bread and foodstuffs, Kojok said.
Finance Minister Amr el-Garhy said that the aim of the IMF delegation’s visit is to update them on the latest positive economic indicators, such as the improved economic activity and growth rates.
He added that the delegation will be briefed on fiscal tightening measures, efforts to trim public debt as well as inflation and account balance updates.
Garhy said that the IMF’s support for Egypt’s reform program is a vote of confidence that will send good signs to domestic and foreign investors concerning the potential of Egypt’s economy, adding that the government in the coming period will work on eliminating all obstacles that stand in the way of developing the local industry.
Kojok said that the IMF’s delegation visit will include a meeting with CBE Governor and Finance Minister on Sunday. The delegation will also hold a series of meetings with officials from the CBE and Finance Ministry to discuss with them the latest developments of Egypt’s economy, most importantly the increase in growth rates during the fourth and last quarter of fiscal year 2016/2017 to around 4.8 percent.
Other positive indicators include a decrease in unemployment rates to 11.9 percent in June 2017, compared with 12.7 percent in June 2016, and the increase in net international reserves to a record of $36 billion.
The delegation will further meet with ministers of social solidarity, investment, petroleum, planning and trade to discuss the details of the reform program and its second phase, which focuses on formulating efficient social security programs, increasing investment rates, supporting exports and encouraging various production sectors, including small- and medium-sized enterprises (SMEs).
Egypt clinched a $12 billion IMF loan deal last November after the fund agreed on the country’s economic reform program.