IMF hails Egyptians ahead of loan review

The head of the International Monetary Fund praised the Egyptian people for their resilience in the wake of the economic crisis ahead of approval of the fourth tranche of the Fund’s £12bn loan. In late January Christine Lagarde commended the patience and commitment of the Egyptian people to the reform process. She will recommend that the IMF’s board approve the release of the next tranche of $2bn in nancing that will take payments by the Fund to $10bn. The preliminary approval was made by IMF Mission chief Subir Lall in November 2018, when he said the economy had continued to perform well, despite less favourable global conditions, supported by the authorities’ strong implementation of the reform programme. Lagarde said it important to build on the progress achieved thus far and to press ahead with structural reforms that facilitated private sector-led growth and job creation, as well as measures to increase transparency and accountabili- ty that help improve governance. The Egyptian government has no plans to seek a renewal of its $12bn nancing agreement from the IMF when the Extended Fund Facility expires in 2019. Finance Minister Mohamed Maait pointed to “some sort of cooperation” with the Fund. In Decem- ber 2018 the World Bank agreed to fund a $1bn programme to support the next phase of the coun- try’s reform programme.

In ation fall opens door to rate cut

In ation enjoyed a sharp fall in December 2019, showing it is back on a downward trend and open- ing the way for further cuts in in interest rates. . The headline rate fell to 12.0% from 15.7% in November and is now almost a third of the peak of 33.0% in July 2017. The fall was driven by a steep drop in food in ation that o set mild rises elsewhere across the economy. Food prices, which account for 40% of the in ation basket, fell to 11.2% from 18.7%, which shaved about three percentage points o the headline rate. Prices rose marginally for housing, transport, health, cloth- ing and were unchanged for education. The latest fall back brings in ation back within the central bank’s target range of 13% plus/minus 3% for the end of the year. The central bank will decide on interest rates next in February 2019. It decided in November 2018 to keep the overnight deposit rate on hold at 16.75%. The decision has been widely predicted by analysts. It marked the fth month in a row that rates have remained on hold after being hiked by a cumulative 200 basis points (2 percentage points).