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International Monetary Fund. Middle East and Central Asia Dept.

Abstract

A year into the coronavirus (COVID-19) pandemic, the race between vaccine and virus entered a new phase in the Middle East and Central Asia, and the path to recovery in 2021 is expected to be long and divergent. The outlook will vary significantly across countries, depending on the pandemic’s path, vaccine rollouts, underlying fragilities, exposure to tourism and contact-intensive sectors, and policy space and actions. 2021 will be the year of policies that continue saving lives and livelihoods and promote recovery, while balancing the need for debt sustainability and financial resilience. At the same time, policymakers must not lose sight of the transformational challenges to build forward better and accelerate the creation of more inclusive, resilient, sustainable, and green economies. Regional and international cooperation will be key complements to strong domestic policies.

International Monetary Fund. African Dept.
The Nigerian economy is at a critical juncture. A weak pre-crisis economy characterized by falling per capita income, double-digit inflation, significant governance vulnerabilities and limited buffers, is grappling with multiple shocks from the COVID-19 pandemic. Real output is projected to contract by 3.2 percent in 2020, with a weak recovery likely to keep per capita income stagnant and no higher than the 2010 level in the medium term. Policy adjustment and reforms are urgently needed to navigate this crisis and change the long-running lackluster course.
International Monetary Fund. Middle East and Central Asia Dept.
The growth impact of the COVID-19 crisis has so far been less severe than expected, as strong consumption helped offset weak tourism and investment. Measures taken to address the health and social needs and support the sectors most directly affected by the crisis appear to have helped mitigate the impact of the shock. External market conditions have improved with a strong return of portfolio inflows since the approval of the Stand-By Arrangement (SBA).
International Monetary Fund. Middle East and Central Asia Dept.

Request for Purchase Under the Rapid Financing Instrument-Press Release; Staff Report; and Statement by the Executive Director for the Arab Republic of Egypt

International Monetary Fund. Middle East and Central Asia Dept.
The COVID-19 pandemic has drastically disrupted people’s lives, livelihoods, and economic conditions. Growth is expected to slow considerably in both 2019/20 and 2020/21 as tourism is at a standstill and domestic activity is expected to significantly slow. The external accounts are expected to deteriorate from portfolio outflows and the shock to tourism and remittances, resulting in an urgent balance of payments need.
International Monetary Fund. Middle East and Central Asia Dept.

1. Prior to the COVID-19 pandemic, Egypt was one of the fastest growing emerging markets, having achieved macroeconomic stabilization after a successful economic reform program. The authorities’ ambitious program supported by the Extended Fund Facility (EFF) during 2016–19 addressed large external and domestic imbalances, raised growth, and expanded social safety nets while sharply reducing public debt. Prior to the pandemic, Egypt’s economic outlook was favorable. Real GDP was 5.6 percent (y/y) in the first half of FY2019/20. Public debt was on a downward trajectory, underpinned by a projected fiscal primary surplus of 2 percent of GDP. At end-February, gross international reserves stood at $45 billion (125 percent of the APIA metric). Inflation had eased, with core inflation well anchored at 1.9 percent (y/y). The aggregate banking system was well capitalized, with ample liquidity, capital buffers, and loan provisioning. In addition, Egypt issued $2 billion in Eurobonds in November 2019 that included a 40-year tranche. The authorities remained committed at the highest levels to advance structural reforms to achieve more inclusive private sector-led growth and jobs and reduce poverty and inequality.

International Monetary Fund. Middle East and Central Asia Dept.
Egypt’s hard-won macroeconomic stability achieved during the three-year arrangement under the Extended Fund Facility (EFF) now faces a significant disruption due to the COVID-19 pandemic. Growth is expected to slow in both FY2019/20 and FY2020/21 as tourism has been halted and domestic activity curtailed. The external accounts have come under pressure due to capital outflows and the shock to tourism and remittances. The authorities responded with a broad package to scale