Abstract
2017 Article IV Consultation, Second Review Under the Extended Arrangement Under the Extended Fund Facility, and Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for the Arab Republic of Egypt
Relations with the Fund
(As of October 31, 2017)
A. Financial Relations
Membership Status: Joined: December 27, 1945; Article VIII.
| General Resources Account | SDR Million | Percent Quota |
| Quota | 2,037.10 | 100.00 |
| Fund holdings of currency | 4629.29 | 227.25 |
| Reserve position in Fund | 275.35 | 13.42 |
| SDR Department | SDR Million | Percent Allocation |
| Net cumulative allocation | 898.45 | 100.00 |
| Holdings | 546.29 | 60.80 |
| Outstanding Purchases and Loans | SDR Million | Percent Allocation |
| Extended Arrangements | 2865.53 | 140.67 |
| General Resources Account | SDR Million | Percent Quota |
| Quota | 2,037.10 | 100.00 |
| Fund holdings of currency | 4629.29 | 227.25 |
| Reserve position in Fund | 275.35 | 13.42 |
| SDR Department | SDR Million | Percent Allocation |
| Net cumulative allocation | 898.45 | 100.00 |
| Holdings | 546.29 | 60.80 |
| Outstanding Purchases and Loans | SDR Million | Percent Allocation |
| Extended Arrangements | 2865.53 | 140.67 |
Financial Arrangements (In millions of SDR)
| Type | Approval Date | Expiration Date | Amount Approved (SDR Million) | Amount Drawn (SDR Million) |
|---|---|---|---|---|
| EFF | Nov 11, 2016 | Nov 10, 2019 | 8596.57 | 2865.53 |
| Stand-By | Oct 11, 1996 | Sep 30, 1998 | 271.40 | 0.00 |
| EFF | Sep 20, 1993 | Sep 19, 1996 | 400.00 | 0.00 |
| Type | Approval Date | Expiration Date | Amount Approved (SDR Million) | Amount Drawn (SDR Million) |
|---|---|---|---|---|
| EFF | Nov 11, 2016 | Nov 10, 2019 | 8596.57 | 2865.53 |
| Stand-By | Oct 11, 1996 | Sep 30, 1998 | 271.40 | 0.00 |
| EFF | Sep 20, 1993 | Sep 19, 1996 | 400.00 | 0.00 |
Projected Obligations to Fund
(SDR million; based on existing use of resources and present holdings of SDRs):
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Principal | 0.00 | 0.00 | 0.00 | 0.00 | 328.34 |
| Charges/interest | 11.84 | 49.01 | 49.01 | 49.03 | 47.71 |
| Total | 11.84 | 49.01 | 49.01 | 49.03 | 376.05 |
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Principal | 0.00 | 0.00 | 0.00 | 0.00 | 328.34 |
| Charges/interest | 11.84 | 49.01 | 49.01 | 49.03 | 47.71 |
| Total | 11.84 | 49.01 | 49.01 | 49.03 | 376.05 |
Implementation of HIPC Initiative: Not Applicable
B. Nonfinancial Relations
Exchange Rate Arrangement
The de jure exchange rate arrangement is floating. Effective November 3, 2016, the CBE announced its decision to move, with immediate effect, to a liberalized exchange rate regime. Pursuant to the above, banks and other market participants are at liberty to quote and trade at any exchange rate. Bid and ask exchange rates are determined by demand and supply. The CBE uses the prevailing market rate for any transactions it undertakes. Accordingly, the de facto exchange rate arrangement was reclassified to floating from other managed. While the Egyptian pound appears to have stabilized since end-March 2017, further observations are necessary to determine the new trend of the exchange rate. Until then, the de facto exchange rate arrangement remains classified as floating.
CBE has supplied foreign exchange at market exchange rates to state-owned enterprises (SOEs) and portfolio investors through the repatriation mechanism. The repatriation mechanism guarantees the availability of FX for capital repatriation to investors that choose to sell FX to the CBE at the time of entry at prevailing exchange rates. The objective is to alleviate convertibility risk for portfolio investors, which was a persistent concern in the period prior to the float and FX market liberalization. In December 2017, the CBE introduced a mandatory fee of 100 basis points for investors, who wish to use the repatriation mechanism as insurance against the convertibility risk. There is also a fee of 50 basis points for exercising the option of buying FX from the CBE at exit.
Egypt is an Article VIII member and maintains one exchange restriction subject to Fund jurisdiction under Article VIII, Section 2(a) and 3 arising from a net debtor position under an inoperative bilateral payment arrangement with Bulgaria.”
Latest Article IV Consultation
The 2014 Article IV consultation was concluded on January 28, 2015 and the Staff Report (IMF Country Report No. 15/33) was published in February 2015.
Technical Assistance in 2014-2017
Fiscal Sector. From 2014 to 2017, the Fiscal Affairs Department (FAD) has provided continued technical assistance mainly on value added tax (VAT) implementation, small business taxation, international taxation, budget planning and fiscal reporting, fiscal risk management and medium-term budget planning, SOE-related fiscal risk analysis and management, tax and custom administrations, on-time filing and payment performance, design of compliance management procedures and workshops on GFMIS.
Monetary and Financial Sector. In recent three years, the Monetary and Capital Markets Department (MCM) has provided TA primarily on financial stability and liquidity management. METAC carried out TA mainly on bank supervision and regulation in the areas of capacity development on securitization, total loss absorbing capacity, capital planning and IRRBB and supervisory review process. A few missions were provided on regulation draft on ICAAP, prudential framework, SREP manual regulations on concentration risk and draft guidelines on disclosure requirements. Three missions were carried out in 2016 and 2017 for providing training on market risk assessment, stress testing on individual banks and supervision of internal audit in banks.
Statistics. The Statistics Department (STA) has provided TA in balance of payments and government statistics. Several missions by STA and METAC on DI position and flow data, trade in service statistics, national accounts, consumer price index were conducted between 2015 and 2017.
Financial Sector Assessment Program
Egypt participated in the FSAP in 2002. The FSAP was updated in 2008.
Senior Resident Representative
Reza Baqir
Relations with the World Bank Group
JMAP Implementation
(As of November 27, 2017)
JMAP Implementation
(As of November 27, 2017)
| Title | Products | Provisional Timing of Missions | Expected Delivery Date |
|---|---|---|---|
| A. Mutual Information on Relevant Work Programs | |||
| Bank work program in next 12 months | Lending Operations:
Technical assistance on several DPF related areas including debt management, modernization of oil and gas sector, and improving the investment climate Poverty assessment and capacity building support to CAPMAS Technical support to help the Government scale up private investment and commercial finance in key economic and social sectors Technical assistance on key social protection areas including on Unified National Registry, pension reform, school feeding, food subsidy, Takafol and Karama Program, Forza program Gender assessment focused on women economic empowerment Technical support on SDG coordination, monitoring and evaluation |
Preparation finalized Ongoing Ongoing Ongoing Ongoing Ongoing Ongoing Ongoing Ongoing Ongoing |
Board 12/05/17 2018 2018 2018/2019 2019 2019 2018/2019 2018/2019 2018 |
JMAP Implementation
(As of November 27, 2017)
| Title | Products | Provisional Timing of Missions | Expected Delivery Date |
|---|---|---|---|
| A. Mutual Information on Relevant Work Programs | |||
| Bank work program in next 12 months | Lending Operations:
Technical assistance on several DPF related areas including debt management, modernization of oil and gas sector, and improving the investment climate Poverty assessment and capacity building support to CAPMAS Technical support to help the Government scale up private investment and commercial finance in key economic and social sectors Technical assistance on key social protection areas including on Unified National Registry, pension reform, school feeding, food subsidy, Takafol and Karama Program, Forza program Gender assessment focused on women economic empowerment Technical support on SDG coordination, monitoring and evaluation |
Preparation finalized Ongoing Ongoing Ongoing Ongoing Ongoing Ongoing Ongoing Ongoing Ongoing |
Board 12/05/17 2018 2018 2018/2019 2019 2019 2018/2019 2018/2019 2018 |
Statistical Issues
(As of end-November 2017)
| I. Assessment of Data Adequacy for Surveillance | |
| General: Data provision is broadly adequate for surveillance, but quality, timeliness, and overall transparency could be improved. Government finance, monetary, and external sector statistics are adequate and recent efforts have improved transparency and dissemination. However, quarterly data on general government are available only with a lag. Finances of state-owned enterprises and their relations to the budget, particularly in the energy sector, remain non-transparent. | |
| National accounts: The National Accounts Department within the Ministry of Planning compiles annual and quarterly national accounts data based on the System of National Accounts 1993. Shortcomings include: inconsistency over time (the base year is often changed without an overlap with the preceding base); inconsistency with balance of payments statistics; weakness in inventory data and deflators for net indirect taxes; and lack of export and import price deflators. | |
| Price statistics: The Central Agency for Public Mobilization and Statistics (CAPMAS) disseminates a monthly producer price index, as well as monthly consumer price index (CPI) data for Upper, Lower and all Egypt. The CPI is compiled using expenditure weights derived from the 2008-09 household expenditure survey. In October 2009, the Central Bank of Egypt (CBE) began releasing its measure of core inflation, which excludes prices for the most volatile food items and regulated prices, and issuing a monthly Inflation Note. | |
| Government finance statistics: The authorities have largely adopted the classification of the Government Finance Statistics Manual 2001 (GSFM 2001), for revenue and expense transactions. Nonetheless, data for general government operations (including budget sector, National Investment Bank, and Social Insurance Funds) under the GFSM 2001 classification are incomplete and lending and repayments are presented based on the GFSM1986 classification. The lack of a GFSM 2001 compliant presentation of transactions in assets and liabilities, other economic flows, and stock positions limits fiscal analysis. Currently, data on external and domestic public debt are compiled and disseminated separately by the CBE and Ministry of Finance. More comprehensive coverage of government and government-guaranteed debt data within a single database could help improve public debt management. | |
| Monetary and financial statistics: Monthly monetary and financial statistics are comprehensive and generally reported within two months after the reference period, but the coverage of data should be expanded to include other financial corporations. Financial sector surveillance: The CBE regularly publishes the financial soundness indicators on its website, but the only aggregate banking sector data is publicly available. The banks’ exposure to the large state-owned enterprises remains non-transparent. |
|
| External sector statistics: The CBE compiles balance of payments statistics based on the Balance of Payments Manual, Fifth Edition (BPM5), and publishes Egypt’s Reserve Template on the IMF’s website since 2009. Previous assessments noted some shortcomings in balance of payments statistics, which have only partially been addressed, including (i) source data that do not reasonably approximate an accrual basis; (ii) unreliable merchandise trade statistics from customs declarations compelling compilers to estimate using banks’ foreign exchange records; and (iii) limited coverage and classification of foreign exchange transactions. METAC missions to the CBE and Ministry of Investment have provided advice on the measurement of foreign direct investment (FDI), and the development of an FDI survey and business register. The CBE publishes the international investment position, but some shortcomings remain to be addressed to connect stocks with flows, improve the reporting system on nonguaranteed debt, and address issues related to residency criteria. |
|
| II. Data Standards and Quality | |
| Egypt began participation in the Special Data Dissemination Standard in 2005. | The data ROSC was published on July 2005. |
| I. Assessment of Data Adequacy for Surveillance | |
| General: Data provision is broadly adequate for surveillance, but quality, timeliness, and overall transparency could be improved. Government finance, monetary, and external sector statistics are adequate and recent efforts have improved transparency and dissemination. However, quarterly data on general government are available only with a lag. Finances of state-owned enterprises and their relations to the budget, particularly in the energy sector, remain non-transparent. | |
| National accounts: The National Accounts Department within the Ministry of Planning compiles annual and quarterly national accounts data based on the System of National Accounts 1993. Shortcomings include: inconsistency over time (the base year is often changed without an overlap with the preceding base); inconsistency with balance of payments statistics; weakness in inventory data and deflators for net indirect taxes; and lack of export and import price deflators. | |
| Price statistics: The Central Agency for Public Mobilization and Statistics (CAPMAS) disseminates a monthly producer price index, as well as monthly consumer price index (CPI) data for Upper, Lower and all Egypt. The CPI is compiled using expenditure weights derived from the 2008-09 household expenditure survey. In October 2009, the Central Bank of Egypt (CBE) began releasing its measure of core inflation, which excludes prices for the most volatile food items and regulated prices, and issuing a monthly Inflation Note. | |
| Government finance statistics: The authorities have largely adopted the classification of the Government Finance Statistics Manual 2001 (GSFM 2001), for revenue and expense transactions. Nonetheless, data for general government operations (including budget sector, National Investment Bank, and Social Insurance Funds) under the GFSM 2001 classification are incomplete and lending and repayments are presented based on the GFSM1986 classification. The lack of a GFSM 2001 compliant presentation of transactions in assets and liabilities, other economic flows, and stock positions limits fiscal analysis. Currently, data on external and domestic public debt are compiled and disseminated separately by the CBE and Ministry of Finance. More comprehensive coverage of government and government-guaranteed debt data within a single database could help improve public debt management. | |
| Monetary and financial statistics: Monthly monetary and financial statistics are comprehensive and generally reported within two months after the reference period, but the coverage of data should be expanded to include other financial corporations. Financial sector surveillance: The CBE regularly publishes the financial soundness indicators on its website, but the only aggregate banking sector data is publicly available. The banks’ exposure to the large state-owned enterprises remains non-transparent. |
|
| External sector statistics: The CBE compiles balance of payments statistics based on the Balance of Payments Manual, Fifth Edition (BPM5), and publishes Egypt’s Reserve Template on the IMF’s website since 2009. Previous assessments noted some shortcomings in balance of payments statistics, which have only partially been addressed, including (i) source data that do not reasonably approximate an accrual basis; (ii) unreliable merchandise trade statistics from customs declarations compelling compilers to estimate using banks’ foreign exchange records; and (iii) limited coverage and classification of foreign exchange transactions. METAC missions to the CBE and Ministry of Investment have provided advice on the measurement of foreign direct investment (FDI), and the development of an FDI survey and business register. The CBE publishes the international investment position, but some shortcomings remain to be addressed to connect stocks with flows, improve the reporting system on nonguaranteed debt, and address issues related to residency criteria. |
|
| II. Data Standards and Quality | |
| Egypt began participation in the Special Data Dissemination Standard in 2005. | The data ROSC was published on July 2005. |
Egypt: Table of Common Indicators Required for Surveillance
(As of end-November 2017)
Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.
Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.
The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); and Not Available (NA)
Reflects the assessment provided in the data ROSC (published on July 21, 2005, and based on the findings of the mission that took place during October 7-20, 2003) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).
Egypt: Table of Common Indicators Required for Surveillance
(As of end-November 2017)
| Date of Latest Observation | Date Received | Frequency of Data6 | Frequency of Reporting6 | Frequency of Publication6 | Memo Items | ||
|---|---|---|---|---|---|---|---|
| Data Quality-Methodological Soundness7 | Data Quality-Accuracy and Reliability8 | ||||||
| Exchange Rates | Real time | Real time | D | D | D | ||
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities1 | Oct-2017 | Nov-2017 | M | M | M | ||
| Reserve/Base Money | Nov-2017 | Nov-2017 | M | M | M | O,O,LO,LO | O,O,O,O,O |
| Broad Money | Nov-2017 | Nov-2017 | M | M | M | ||
| Central Bank Balance Sheet | Nov-2017 | Nov-2017 | M | M | M | ||
| Consolidated Balance Sheet of the Banking System | June-2017 | Sep-2017 | Q | Q | Q | ||
| Interest Rates2 | Real time | Real time | D | D | D/I | ||
| Consumer Price Index | Oct-2017 | Oct-2017 | M | M | M | O,O,O,O | LNO,LNO,LN, LO,LO |
| Revenue, Expenditure and Balance — General Government3 | June-2017 | Oct-2017 | I | I | Q/I | LO,LO,O,O | LO,O,O,O,O |
| Revenue, Expenditure, and Balance— Central Government | Sep-2017 | Oct-2017 | I | I | Q/I | ||
| Stocks of Central Government and Central Government-Guaranteed Debt4 | June-2017 | Oct-2017 | I | I | A/Q | ||
| External Current Account Balance | Jun-2017 | Oct-2017 | Q | Q | Q | O,LO,LO,LO | LNO,O,O,O,O |
| Exports and Imports of Goods and Services | Jun-2017 | Oct-2017 | Q | Q | Q | ||
| GDP/GNP | 2016/17 Q4 | June-2017 | Q | Q | Q | O,O,O,LO | LO,LO,LO,O, LO |
| Gross External Debt | Jun-2017 | Oct-2017 | Q | Q | Q | ||
| International Investment Position5 | Jun-2017 | Oct-2017 | Q | Q | Q | ||
Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.
Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.
The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); and Not Available (NA)
Reflects the assessment provided in the data ROSC (published on July 21, 2005, and based on the findings of the mission that took place during October 7-20, 2003) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).
Egypt: Table of Common Indicators Required for Surveillance
(As of end-November 2017)
| Date of Latest Observation | Date Received | Frequency of Data6 | Frequency of Reporting6 | Frequency of Publication6 | Memo Items | ||
|---|---|---|---|---|---|---|---|
| Data Quality-Methodological Soundness7 | Data Quality-Accuracy and Reliability8 | ||||||
| Exchange Rates | Real time | Real time | D | D | D | ||
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities1 | Oct-2017 | Nov-2017 | M | M | M | ||
| Reserve/Base Money | Nov-2017 | Nov-2017 | M | M | M | O,O,LO,LO | O,O,O,O,O |
| Broad Money | Nov-2017 | Nov-2017 | M | M | M | ||
| Central Bank Balance Sheet | Nov-2017 | Nov-2017 | M | M | M | ||
| Consolidated Balance Sheet of the Banking System | June-2017 | Sep-2017 | Q | Q | Q | ||
| Interest Rates2 | Real time | Real time | D | D | D/I | ||
| Consumer Price Index | Oct-2017 | Oct-2017 | M | M | M | O,O,O,O | LNO,LNO,LN, LO,LO |
| Revenue, Expenditure and Balance — General Government3 | June-2017 | Oct-2017 | I | I | Q/I | LO,LO,O,O | LO,O,O,O,O |
| Revenue, Expenditure, and Balance— Central Government | Sep-2017 | Oct-2017 | I | I | Q/I | ||
| Stocks of Central Government and Central Government-Guaranteed Debt4 | June-2017 | Oct-2017 | I | I | A/Q | ||
| External Current Account Balance | Jun-2017 | Oct-2017 | Q | Q | Q | O,LO,LO,LO | LNO,O,O,O,O |
| Exports and Imports of Goods and Services | Jun-2017 | Oct-2017 | Q | Q | Q | ||
| GDP/GNP | 2016/17 Q4 | June-2017 | Q | Q | Q | O,O,O,LO | LO,LO,LO,O, LO |
| Gross External Debt | Jun-2017 | Oct-2017 | Q | Q | Q | ||
| International Investment Position5 | Jun-2017 | Oct-2017 | Q | Q | Q | ||
Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.
Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.
The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); and Not Available (NA)
Reflects the assessment provided in the data ROSC (published on July 21, 2005, and based on the findings of the mission that took place during October 7-20, 2003) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).