Egypt returns to international market through ‘successful’ Eurobond issuance – IMF

Egypt has returned to international markets through the successful issuance of a US$1.5 billion Eurobond, said Chris Jarvis, Chief of Mission in Egypt of the International Monetary Fund (IMF) Friday.

Jarvis added that macroeconomic figures point to some improvement, with growth rebounding to 4.2% in 2014/2015, while inflation has declined.

Resilience of the banking sector is continued due to financial soundness indicators, he said, adding the Egyptian government is making efforts to deepen financial inclusion.

At the end of his visit to Cairo, which took place from 13-17 September, Jarvis said that the government succeeded in significantly reducing the underlying budget deficit despite a decline in foreign grants.

Jarvis attributed this to a wide-ranging set of reforms including energy subsidy reforms, and progress in containing the wage bill and increasing tax revenues.

The head of the mission welcomed the government’s plan to pursue fiscal and structural reforms in order to put public debt on a downward-trending path and encourage private sector credit.

“The Central Bank of Egypt (CBE) is making efforts to curb the parallel exchange market. It has also allowed movement in the official exchange rate and widened the exchange-rate margin earlier this year,” Jarvis said.  “It is considered a gradual move toward a more flexible exchange rate policy focused on achieving a market-clearing rate would serve Egypt’s interests.”

This move would improve the availability of foreign exchange, strengthen competitiveness, support exports and tourism, and attract foreign direct investment.

Besides, unemployment remains high notably among the youth and the fiscal deficit is still large and domestic public debt high.

“There have been positive economic developments since the mission’s last visit in Egypt. Some of the pledges made at the Economic Summit in March are already in the implementation phase,” he said. “In August, the New Suez Canal was opened after just one year of work; and a major gas [was found] in Egyptian waters, which is good for the country’s economy in the medium term”.