IMF gives Egypt economic reform programme thumbs up

Final review of IMF-backed economic programme planned within coming months

President Donald Trump welcomes visiting Egyptian President Abdel Fattah el-Sisi to the White House in Washington on April 9, 2019. AP

Egypt's economic reform programme, backed by a three-year $12 billion loan from the International Monetary Fund, is progressing well as the economy expands and unemployment drops, the fund's director said.

A final review of the programme is scheduled for the coming months, the IMF's managing director Christine Lagarde said on Tuesday following a meeting with Egyptian President Abdel Fattah El Sisi in Washington.

"The economy continues to grow robustly, unemployment is at its lowest level since 2011, foreign exchange reserves are at comfortable levels, and public debt is on a downward trajectory supported by growth-friendly consolidation efforts," Ms Lagarde said.

The North African country has made significant gains in implementing a economic reform programme after the IMF provided a $12-billion lifeline in 2016 that helped restore investor confidence in the the Arab world’s most populous nation. This week the IMF forecast that Egypt's economy will expand 5.5 per cent in 2019, from 5.3 per cent last year, and accelerate 5.9 per cent in 2020. Unemployment is projected to fall to 9.6 per cent from 10.9 percent last year.

Ms Lagarde's comments came amid President Sisi's visit to President Donald Trump in Washington on Tuesday. The US leader praised his Egyptian counterpart's performance when asked about Mr Sisi's efforts to extend his rule.

In the IMF's fourth review of Egypt's economic
programme in April, it warned that the country must keep its monetary policy tight to avoid another rise in inflation amid global risk-aversion to emerging markets.

Egypt's annual inflation rate slowed slightly to 14.2 per cent in March versus 14.4 per cent in February, according to data released by the state-run statistic agency, CAPMAS.
Egypt's decision to float the currency and begin slashing fuel subsidies in 2016 led to a rise in inflation that jumped to over 34 per cent, before easing back gradually last year.

The remainder of the programme is now "focused on consolidating the gains in macroeconomic stabilisation, further rebuilding fiscal buffers, and advancing reforms to ensure that lasting progress is achieved", the IMF said in its fourth review in an April report.