Egypt to step back from IMF loans in 2019

The Egyptian government has no plans to seek a renewal of its $12bn nancing agreement from the International Monetary Fund when the Extended Fund Facility expires in 2019. Finance Minis- ter Mohamed Maait pointed to “some sort of cooperation” with the Fund. The IMF released the next tranche of $2bn in nancing in November 2018 after holding meetings with the Egyptian authori- ties taking payments to $10bn. Mission chief Subir Lall said the economy had continued to perform well, despite less favourable global conditions, supported by the authorities’ strong implementation of the reform programme. He said Egypt’s scal policy in 2018/19 and beyond would continue to aim at keeping general government debt on a clearly declining path and achieving a primary surplus of 2% of GDP. Egypt has achieved its rst primary budget surplus in 15 years for the scal year that ended in June 2018. The surplus, which excludes debt interest payments, came in at EGP4.0bn or 0.2% of GDP. The government is aiming for a 2% primary surplus (or $5.5bn) in the current scal year, which began in July. However, the overall budget de cit was 9.8% of GDP in 2017-18, about 10% lower than the previous nancial year. The government approved its 2018/19 scal year budget in March 2018, targeting a budget de cit of 8.4% of GDP

In ation back on downward path

In ation looks set to resume a downward trend after recording its rst fall in the annual rate for four months in November 2018. The headline rate fell to 15.7% from 17.7% in October and below a peak of 33.0% in July 2017. The fall was driven by weaker food in ation and a sharp fall in clothes price in ation o setting minor falls in other groups. Food prices, which account for 40% of the in ation basket, fell to 18.7% from 20.2%, thanks to a slowdown in fruits and vegetables. The central bank decided in November 2018 to keep the overnight deposit rate on hold at 16.75%. The decision has been widely predicted by analysts. It marks the fth month in a row that rates have remained on hold after being hiked by a cumulative 200 basis points (2 percentage points) over the past two years. Explaining its interest rate decision, the bank said current monetary policy remained in line with achieving single digit in ation. It added that it closely monitored all econom- ic developments and would not hesitate to adjust its stance to achieve its mandate of price stabili- ty over the medium term.