on better targeted social programs that help the most vulnerable and in ambitious home-grown reform program which has aimed to correct Egypt’s capacity to repay is adequate, but risks remain. 19. the middle class. The authorities intend to publish the MTRS by end-2019 (LOI ¶8). economic reform program supported by a three-year Extended Fund Facility He added that the staff-level agreement is subject to approval by the IMF’s Executive Board and that the completion of this review would make available SDR 1,432.76 million (about US$2 billion), bringing total disbursements under the program to about US$12 billion. These variables are measured on a cumulative basis from the beginning of the fiscal year. Continued strong growth will be essential to navigate medium-term demographic challenges. A summary of last week’s major macroeconomic updates and indicators brought to you on one page for your convenience. 6. 17. The PFM law will be also modernized to revamp the entire budget process, including the introduction of a medium-term budget framework. Retail prices for a range of products were increased by an average of 22 percent on July 5, with the fuel subsidy bill projected to fall to 0.8 percent of GDP in 2019/20 from 1.6 percent in 2018/19 (LOI ¶12). 19. Government overdraft at the CBE is defined as the balance on the government’s overdraft account at the CBE minus government’s foreign currency deposits at the CBE. Several other benchmarks were missed: new guidelines for industrial land allocation were approved at end-March but they do not include a market-based allocation mechanism as specified under the benchmark; minority shares were divested through IPOs in one state-owned enterprise by mid-June instead of four; the approval of executive regulations for the new Government Procurement Law was delayed to incorporate comments from the World Bank; and the separation of the regulatory authority for transportation from the Ministry of Transportation (MoT) was delayed due to organizational changes at the MoT. 5/Includes multilateral and bilateral public sector borrowing, private borrowing and prospective financing. 3/The primary balance for 2017/18 excludes the recapitalization of the CBE for 6 billion Egyptian pounds. The draft banking law, which strengthens independence and governance of the CBE, will be discussed by Parliament in October. At the end of the visit Mr. Lall issued the following statement: “The IMF staff team and the Egyptian authorities have reached a staff-level The fiscal consolidation has helped anchor a decline in general government debt from a peak of 103 percent of GDP at end-2016/17 to 85 percent of GDP estimated at the end of 2018/19. appropriately calibrated, helping to reduce inflation from 33 percent 11. 2For FY2017/18, cumulative flows are from November 1, 2017. Sunday, 19th May 2019 The International Monetary Fund (IMF) has reached an agreement with the Egyptian government on the fifth review of the country’s economic reform program, which comes in line with the three-year extended fund facility (EFF), stated Subir Lall, head of the IMF mission to Egypt. significant external and domestic imbalances, promote inclusive growth If data are unavailable or indicator is not relevant, cell is white. Sources: Egyptian authorities; and IMF staff estimates and projections. Egypt has experienced a significant reduction in external imbalances over the past three years, with the current account deficit declining from 6 percent of GDP in 2015/16 to 2.6 percent projected in 2018/19. The program was designed to reduce Egypt’s budget and current account deficits. The indexation mechanism is intended to maintain prices at cost-recovery levels and safeguard the budget from unexpected changes in the exchange rate and global oil prices. 15. 2/Assumes repurchases are made on obligations schedule. Cash basis. These measures are essential building blocks to improve the welfare of all Egyptians by creating a supportive environment for private sector-driven inclusive growth and job creation. 2The Executive Board meeting for the Second review took place on December 20, 2017. 9. Its monetary policy stance has been 24. We look forward to REPORT: Request for a 12-Month Stand-By Arrangement for the Arab Republic of Egypt More Key Questions on Egypt, updated June 2020 Our Standards: The Thomson Reuters Trust Principles. An unchanged nominal exchange rate in the context of high domestic inflation has resulted in sustained real appreciation over the past two years. 5/The key variables include real GDP growth; nominal interest rate; dollar deflator growth; and both non-interest current account and non-debt inflows in percent of GDP. These subsidies are measured in domestic currency on a cumulative basis from the beginning of the fiscal year. As the EFF arrangement draws to its end, our reforms will continue and the achievements realized so far will form a solid foundation for our policies and reforms over the medium term. The mechanism is intended to maintain prices at cost-recovery levels and safeguard the budget from unexpected changes in the exchange rate and global oil prices. In parallel, we continue with the electricity subsidy reform. Exports outside the oil and gas sector have strengthened modestly following the depreciation in 2016 but remain low compared to other emerging market peers at around 6 percent of GDP. 11. In February, Egypt received a fifth $2 billion tranche from the International Monetary Fund of the $12 billion loan package from the international lender. 29. GDP growth accelerated from 4.2 percent in 2016/17 to 5.3 percent in The program target is defined as a cumulative change in debt of the budget sector from the beginning of the fiscal year. We will continue to broaden the coverage of SOE report and publish it annually. Policy discussions focused on maintaining a sound policy framework while following through on structural reforms to create space for private sector development and sustain strong growth. In the medium term, we intend to adopt a forward-looking and interest rate-based monetary policy framework with inflation as the nominal anchor.