Egypt’s ‘swift, coherent response’ keeps Mideast economic fallout ‘contained’ – IMF
Egypt’s authorities have mounted “a proactive, timely, and well-coordinated response” to the ongoing conflict in the Middle East, helping to keep its economic impact relatively contained so far, a senior International Monetary Fund official said.
Julie Kozack, director of communications at the IMF, said at a recent press briefing that the fallout from regional tensions has not significantly disrupted Egypt’s economy so far.
“So far, the impact on Egypt has remained relatively contained,” Kozack said.
She noted that authorities had activated a high-level crisis management committee early in the conflict, enabling “a swift and coherent economic response” to emerging risks.
Shock Absorber
A flexible exchange rate has played a key role in absorbing external shocks, Kozack added, allowing the currency to act as a buffer against external pressures.
“Flexibility of the exchange rate has allowed the currency to act as a shock absorber and to contain and cushion some of the external pressures,” she said, adding that it had also helped preserve Egypt’s foreign currency reserves.
Egypt has also sought to strike a balance between maintaining fiscal discipline and supporting vulnerable groups amid ongoing economic pressures.
Kozack said authorities had continued to target social spending at the most vulnerable households while keeping overall fiscal policy on a prudent path.
“Egypt is also carefully balancing the need to maintain fiscal discipline, given fiscal pressures, but also to support vulnerable households. And they’ve been doing this by ensuring that there is social spending targeted at vulnerable households, even as they have ensured that the fiscal stance remains prudent.”
Egypt has been implementing a series of economic reforms, including a move to a more flexible exchange rate in March 2024, as part of broader efforts to stabilise the economy and strengthen resilience against external shocks.
Attribution: Amwal Al Ghad English