IMF expects Egypt second instalment end-2017, inflation to fall

Egypt is expected to receive the third installment of around $2 billion of its $12 billion loan programme with the International Monetary Fund after second review at the end of this year, the IMF said Tuesday.

Egypt agreed a three-year, $12 billion IMF loan program in November last year that is tied to ambitious economic reforms such as spending cuts and tax hikes to help revive an economy where subsidies accounted for a quarter of state spending.

Egypt’s inflation is expected to fall to “slightly above” 10 percent by the end of financial year 2017/2018 and to single digits by 2019, Subir Lall, IMF Mission Chief for Egypt, Middle East and Central Asia Department, said in an online briefing.

The IMF revised its 2017/2018 growth forecast for Egypt to 4.5 percent, compared to 3.5 percent in previous year.

“Egypt’s reform programme is off to a good start. The transition to a flexible exchange rate went smoothly. The parallel market has virtually disappeared and central bank reserves have increased significantly,” the IMF said in a review of the programme.

The IMF said the country’s current account deficit was seen narrowing to 4.6 percent of GDP in 2017/18 fiscal year and to 3.8 percent in 2018/19. It said it primary fiscal deficit seen at 1.8 percent of GDP, exceeding the programme target of 1 percent.