Arab Republic of Egypt: Fourth Review under the Extended Arrangement under the Extended Fund Facility—Press Release; Staff Report; and Statement by the Executive Director for the Arab Republic of Egypt
Author: International Monetary Fund. Middle East and Central Asia Dept.
Publication Date:
06 Apr 2019
eISBN:
9781498306676
Language:
English
Keywords:
ISCR; CR; Egypt; fuel price indexation; Fund; inflation expectation; GDP; US$; debt service; financing gap; trade balance; headline inflation; long-term debt; factor cost
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Fourth Review Under the Extended Arrangement Under the Extended Fund Facility-Press Release; Staff Report; and Statement by the Executive Director for the Arab Republic of Egypt

Abstract

Fourth Review Under the Extended Arrangement Under the Extended Fund Facility-Press Release; Staff Report; and Statement by the Executive Director for the Arab Republic of Egypt

Recent Developments and Program Performance

1. Egypt has preserved macroeconomic stability thanks to the authorities’ sound policy implementation. GDP growth rose from 4.2 percent in 2016/17 to 5.3 percent in 2017/18, supported by the recovery in net exports and investment that offset the softening in domestic consumption. The unemployment rate has declined to single digits and is at its lowest since 2011. The current account deficit narrowed to 2.4 percent of GDP from 5.6 percent in the previous year, reflecting rising tourism and robust remittance inflows. Gross international reserves stood at around 6 months of prospective imports at end-2018. After declining to 11 percent in May, headline inflation rose to 17.7 percent in October primarily because of the energy price increases in June and a jump in the prices of some vegetables but fell again to 12 percent in December as the rise in vegetable prices was partially reversed. Core inflation remained contained at around 8 percent. The budget recorded a primary surplus of 0.2 percent of GDP in 2017/18,1 constituting an improvement of 2 percent of GDP from 2016/17, as programmed, which together with strong growth in nominal GDP reduced general government gross debt from 103 percent of GDP to 93 percent in one year.

Figure 1.
Figure 1.

Egypt: Recent Macroeconomic Developments

Citation: IMF Staff Country Reports 2019, 098; 10.5089/9781498306676.002.A001

Sources: Egyptian authorities and IMF staff calculations.

2. The external environment has deteriorated. The tightening of global financing conditions and pullback of investors from emerging markets has led to considerable net portfolio outflows from Egypt since April. This has pushed up yields on government securities by around 300–400 basis points, with the authorities cancelling a number of domestic bond auctions and shortening maturities of new issuances to contain interest costs. The decline in foreign demand for treasury securities was partly offset by an increase in purchases by the state-owned National Investment Bank2 limiting the resulting increase in domestic yields. The remaining shortfall in domestic financing was met by drawing on the government’s overdraft facility with the Central Bank of Egypt (CBE), which exceeded the statutory limit in mid-September but was subsequently contained.3 Despite sizable capital outflows, the exchange rate of the Egyptian pound against the dollar remained stable through mid-January. International reserves of the CBE stood at a comfortable $42 billion in December, equivalent to 6 months of imports.

uA01fig01

Treasury Bill Auction Yields (percent)

Citation: IMF Staff Country Reports 2019, 098; 10.5089/9781498306676.002.A001

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Exchange Rate (EGP/USD)

Citation: IMF Staff Country Reports 2019, 098; 10.5089/9781498306676.002.A001

3. Program performance has been broadly on track. All end-June and end-December performance criteria and indicative targets were met, except for the end-June indicative target (IT) on public debt, which was breached because of higher-than-programmed interest expenditure (December data is not yet available) and the end-December IT on payment of EGPC arrears, with the shortfall having been pre-paid in 2017/18. However, a number of structural benchmarks (SB) have been delayed or missed, partly because of capacity constraints. Foreign exchange deposits of the CBE in foreign branches of domestic banks were reduced to under $1.5 billion on January 3, 2019 instead of December 31, 2018; the working group on the reform of industrial land allocation was formed in September (end-June SB) due to the cabinet reshuffle; the two reports on state-owned enterprises (SOEs) were implemented as planned by end-June and end-December respectively, but due to capacity constraints had gaps in coverage and information; the submission of the draft law on the Egyptian Competition Authority to Parliament was delayed to January 2019 instead of October 2018; the formation of the independent regulatory authority for transport was not completed by end-December 2018 and is proposed as a structural benchmark for end-March 2019; the reform plan for industrial land allocation was incomplete as it lacked sufficient operational details particularly with regard to the application of broad market-based principles; and the draft banking law was submitted to Cabinet in December instead of September to allow more time to fully reflect the recommendations of Fund technical assistance. Despite the delays, the program objectives remain achievable.

Outlook and Risks

4. The outlook is favorable, provided policies as agreed under the program are implemented. The continued strengthening of tourism and construction, and rising production of natural gas are projected to raise GDP growth to 5.5 percent in 2018/19. Growth is projected to rise further to 6 percent over the medium term as ongoing structural reforms are fully implemented and translate into stronger private investment. Inflation is expected in the range of 13–14 percent by the end of the fiscal year, and to reach single digits in 2020. The current account deficit is projected to gradually narrow from 2.4 percent of GDP in 2017/18 to under 2 percent of GDP in the medium term, and general government gross debt to continue to decline to 74 percent of GDP by 2022/23.

5. The balance of risks has worsened with the recent tightening of global financial conditions. A sustained increase in real interest rates or an abrupt depreciation of the pound could result in adverse public debt dynamics. Moreover, limited exchange rate flexibility is discouraging inflows into the local treasury market, while the short foreign exchange (FX) position of some banks leaves them exposed to a disorderly adjustment of the exchange rate. An unexpected increase in global oil prices would increase the fuel subsidy bill in 2018/19 and require a larger adjustment in fuel prices to achieve cost recovery and preserve medium-term fiscal consolidation. Calls on state-guaranteed loans, which have been increasingly used to finance large infrastructure projects by public entities, or other contingent liabilities could also put pressure on public debt. Additional risks include a deterioration of the security situation that would disrupt the recovery in tourism, resistance from vested interest that could weaken the reform momentum, and concerns about public reaction to reforms of the fuel subsidy system could complicate their implementation. These risks are mitigated by the authorities’ record of reform implementation. The more challenging external environment heightens the importance of maintaining sound policies, including greater exchange rate flexibility.

Policy Discussions

In light of the persistent nature of global financial tightening, discussions focused on the needed adjustments to the macroeconomic policy framework to ensure that program objectives remain achievable. The authorities are undertaking additional efforts to enhance exchange rate flexibility, which is essential to prevent the build-up of external pressures; and will maintain a tight monetary policy stance until the dis-inflation trend is reestablished. The planned completion of the fuel subsidy reform is critical to free up fiscal space for priority expenditures and to improve the efficiency of energy consumption. The authorities are also implementing structural reforms to improve the business climate and reduce opportunities for rent seeking. These reforms are important to attract private investment, increase productivity and generate higher growth and more jobs.

Monetary, Exchange Rate, and Financial Sector Policies

6. Monetary policy will remain anchored to the CBE’s medium-term objective of guiding inflation down to single digits. While the pick-up in inflation in recent months was driven primarily by supply-side factors (energy and food prices), the monetary policy stance is expected to remain restrictive to contain possible second-round effects. Sustained disinflation would provide scope for market interest rates to ease. However, should demand pressures remerge, the CBE remains prepared to tighten the policy stance further as needed. To achieve its operational targets set in terms of reserve money, the CBE will continue to manage domestic liquidity using open market operations, while containing government overdrafts (proposed end-March 2019 PC). Beginning in fiscal year 2019/20, all overdrafts will be issued at market rates.4 To address the historically high volatility of food prices, the government is taking measures to address supply bottlenecks by improving logistics and transport infrastructure.

7. Exchange rate flexibility is essential to buffer external shocks and preserve competitiveness. The Egyptian pound has remained stable against the dollar but appreciated against other trading partner currencies in both nominal and real effective terms.5 If this pattern persists, it could limit further narrowing of the current account deficit. A significant share of portfolio outflows has been absorbed through the repatriation mechanism,6 with no effect on the exchange rate or reserves. The remainder, has passed through the interbank market, but its impact on the exchange rate has largely been offset by foreign currency sales by some large state-owned banks, which have breached their regulatory limits on net open FX positions (NOP). To enhance exchange rate flexibility and deepen the FX market, in November the CBE eliminated the repatriation mechanism for new inflows. Moreover, since the persistent breach of FX exposure limits could weaken the rules-based system of banking supervision that underpins financial stability, and expose banks to exchange rate risk, the CBE will no longer grant exemptions from the NOP limit and will strictly enforce sanctions as envisaged in banking regulations (proposed continuous SB, MEFP ¶20). Notwithstanding these, the position of the banking system has overall remained unchanged from the previous review: banks remain liquid, profitable, and generally well capitalized, and nonperforming loans are contained and well provisioned.

8. International reserves remain adequate. Gross international reserves stood at about 125 percent of the Fund’s Assessing Reserve Adequacy (ARA) metric at end-2018 and are projected to be maintained at about the same level throughout the program period. As part of an ongoing effort to strengthen reserve management, the CBE reduced its holding of FX deposits in foreign branches of domestic banks to below $1.5 billion in early January (a small delay from the end-December SB), and will reallocate the rest in at least A-rated banks and financial instruments, in line with the previously announced schedule (MEFP ¶8).

9. The CBE intends to gradually move to an interest rate-based monetary policy framework anchored to inflation in the medium term. To strengthen its institutional framework, a revised draft Banking Law was finalized with the support of Fund technical assistance and sent to Cabinet. The new draft law will improve collegial decision making in the CBE, establish price stability as the primary objective of monetary policy, limit monetary financing and strengthen the CBE’s institutional and operational autonomy. It will also limit CBE lending to banks for short-term liquidity support and clarify the role of the CBE and government in crisis management. Finally, it will strengthen the supervisory framework for early intervention and resolution (MEFP ¶10).

Fiscal Policy

10. The 2018/19 budget is on track to reach the targeted primary surplus of 2 percent of GDP. This will complete the programmed three-year fiscal consolidation of 5.5 percent of GDP. The overall deficit is also projected to narrow from 9.8 percent of GDP in 2017/18 to 8.3 percent in 2018/19, which is 0.2 percent of GDP higher than programmed due to higher borrowing costs. Tax revenue is expected to fall slightly short of the programmed number but would remain unchanged from the previous year at 14.2 percent of GDP. The consolidation is being driven by the projected reduction in the energy subsidy bill (by 1.4 percent of GDP), of which 0.9 percent of GDP is due to lower fuel subsidies as higher oil prices have been partly offset by reduced consumption, and a smaller wage bill (by 0.3 percent of GDP). Part of these savings will be used to increase investment (0.3 percent of GDP). A smaller overall deficit and high nominal GDP growth are projected to reduce general government gross debt from 93 percent of GDP last year to about 86 percent this year. The authorities remain committed to delaying non-priority spending if needed to reach the primary surplus target. At the same time, to create fiscal space for the needed spending in health, education, infrastructure, and social protection, they are implementing a Medium-Term Revenue Strategy, which aims to strengthen and modernize revenue mobilization. The Fund is providing technical assistance in this area.

11. Strengthening social protection has been the authorities’ priority since the start of the reform program. Since product subsidies are inefficient, costly and inequitable, the authorities have been gradually expanding better-targeted social programs. These include (1) Takafol and Karama— cash transfer programs to the poorest households, the coverage of which has been expanded to more than 10 million people7; (2) Forsa—a program that helps create job opportunities; (3) Mastoura, which helps with microcredit for women; and (4) Sakan Karim—a program that promotes access to clean drinking water and sanitation. Additional measures to compensate the impact of the adjustment, including on the lower middle class, include lump-sum public wage bonuses, a 15 percent increase in pensions, and progressive tax credits. The authorities are also considering a broader reform of the pension system, the distributional implications of which will need to be assessed carefully.

12. The reform of fuel subsidies is on track to be completed in 2018/19. The authorities are committed to reaching full cost recovery by the end of 2018/19 for all fuel products, except for LPG and fuel oil used in bakeries and electricity generation (SB for June 15, 2019)8. At current oil prices, these are priced at about 85–90 percent of cost recovery. The authorities have opted for a phased approach to the planned introduction of fuel price indexation for all products indicated at the time of the third review. In December the Prime Minister issued a decree to implement the fuel price indexation mechanism for gasoline Octane 95 from end-December 2018 with the first price adjustment at end-March 2019. 9 Indexation for other fuel products will be introduced by June 5, 2019 with the first price adjustment at end-September 2019 (proposed SB). The authorities are also planning to hedge oil prices, but the mission advised caution in using financial instruments with upfront costs that protect only temporarily against extreme price movements. Reform of electricity subsidies will continue as planned towards the goal of full elimination by 2020/21.

13. A steady reduction in public debt remains the key objective of fiscal policy in the medium term. The updated debt sustainability analysis indicates that Egypt’s debt is sustainable, but subject to significant risks (Annex 1), including from less favorable financing conditions. Egypt’s interest cost as a share of tax revenue is higher compared to peers, while the increased reliance on shorter-term debt and foreign currency financing have increased rollover and exchange rate risks. With the sizable exit of foreign investors from the treasury securities’ market, higher local currency yields may be unavoidable in the near term, and cancelling bond auctions to avoid high rates may result in financing shortfalls or the need to resort frequently to CBE overdrafts—which can be inflationary and would undermine the CBE’s inflation targeting ambitions. Going forward, the authorities will reject only outlier bids in auctions, while allowing the winning bids to reflect market conditions. The ultimate resolution of Egypt’s still-high debt will rely on maintaining primary surpluses of around 2 percent of GDP in the coming years. This is well above the debt stabilizing primary deficit of 2.7 percent of GDP. These efforts need to be supported by the continued implementation of reforms to raise Egypt’s growth potential.

uA01fig03

Interest Costs as a Share of Tax Revenue, 2017

(Percent)

Citation: IMF Staff Country Reports 2019, 098; 10.5089/9781498306676.002.A001

Source: WEO

14. Significant progress was achieved in improving transparency and accountability of SOEs. The authorities issued an update to the June report at end-December, which now includes about 300 SOEs with abridged financial statements added for most of them. They also published a supplementary report, which among other useful information contains a description of the legal framework governing state ownership of SOEs and the impact of the SOE sector on government finances. It lacked, however, details on the impact of the SOE sector on the economy. Despite the shortfalls, the reports constitute a significant achievement in disseminating information on SOE governance. As the authorities develop capacity, they plan to improve the quality of SOE reports, which will be published annually. The reports will serve as a basis for the planned work on a comprehensive SOE reform strategy to streamline and modernize the legal, governance, and operational frameworks for the sector. Other priority areas include pension reforms, revisions to the PFM law to introduce medium-term budgeting, and improvements in fiscal transparency and accountability (MEFP ¶15).

15. The authorities intend to restructure the National Investment Bank (NIB), which is part of the general government. NIB maintains significant retail deposits in the form of investment certificates and has a large portfolio of SOE loans, but is not subject to banking regulations and supervision. Coinciding with the exit of foreign portfolio investors in recent months, NIB has expanded its balance sheet considerably by investing the proceeds from increased issuance of certificates in treasury securities. The authorities are planning to strengthen its financial position, and as a first step they will form an inter-ministerial committee, which by end-March 2019 will develop a plan, endorsed by the Prime Minister, with NIB’s revised mandate, new business model, and the proposed financial structure of the entity going forward (SB).

Structural Reforms

16. The structural reform agenda for the remainder of the program remains ambitious (MEFP ¶25). Egypt advanced eight positions in the World Bank’s Ease of Doing Business ranking for 2019 and 15 positions on World Economic Forum’s 2018 Global Competitiveness index, reflecting the reforms implemented so far. The authorities acknowledge that more needs to be done to make Egypt an attractive destination for private investment. To this end, they have prioritized reforms that address key impediments to private sector-led growth and have potential to generate significant economic returns over a relatively short period of time. These reforms aim to improve the efficiency of resource allocation by strengthening competition, improving governance and limiting the scope for corruption, and reducing the role of the state. The reforms have progressed well thus far, with some delays due in part to capacity constraints. The authorities are committed to carry the momentum forward beyond the program period.

17. Improving availability and access to industrial land is critical for private sector development. The current system of industrial land allocation, which narrowly prescribes land use and sells it at a nominal fixed price on a first-come-first-served basis, is inefficient. It leads to land misallocation and forgone revenue for the state, and is prone to perceptions of corruption. In September the authorities formed a working group under the Prime Minister to prepare a reform plan for moving to a transparent, competitive, and market-based mechanism for industrial land allocation operated through an online platform. The first draft of the plan, prepared in December 2018, was an important step forward in this direction. However, it fell short of the structural benchmark in providing sufficient operational details to form the basis for land allocation guidelines. Notably, it did not envisage competitive bidding, which is critical to minimize land misallocation. Nevertheless, the authorities expressed commitment to develop new guidelines for industrial land allocation based on the same key principles. The guidelines will be approved by a Ministerial decree and published by end-March 2019 (proposed modified SB).

18. The reform of public procurement is advancing. The new Government Procurement Act was signed into a law by the President on October 3, 2018 and became effective on November 2. The authorities are now developing executive regulations to standardize procurement procedures across all government entities covered by the law and to ensure a transparent and competitive bidding. Because of the delayed enactment of the law, it is proposed that the SB on approval of the executive regulations be reset from end-March to end-May 2019. Further, the e-Procurement portal will be launched by end-May 2019 (SB), and by June 15, 2019 the Prime Minister will approve a plan to align SOE’s procurement rules with the new law (SB).

19. To strengthen competition the authorities are revamping the law on the Egyptian Competition Authority (ECA). The objective is to strengthen the institutional, financial, and operational independence of the competition watchdog, while enhancing its accountability and transparency. The draft law was submitted to Parliament in January (end-October 2018 SB). It strengthens operational autonomy of the ECA and provides it with the necessary administrative fining powers, but does not exclude the ECA from the salary cap for public employees because the ECA is part of the civil service. It also does not provide a single digit budget, which would be inconsistent with the Constitution, but ensures financial autonomy of the ECA. The draft law is expected to be passed by Parliament by end-March 2019.

20. The authorities are moving forward with other reforms. To attract private investment and reduce the role of the state in the economy, minority stakes in five SOEs are currently being divested (end-December 2018 SB) and more are planned for 2019. The expenditure of EGP600 million in 2018/19 to improve the availability of public nurseries and other facilities to enhance the ability of women to actively seek jobs is on track. Work is ongoing to separate the regulatory authority for public transportation from the Ministry of Transportation (SB), but because of complexity of the reform, the authorities are requesting to reset the SB to March 31, 2019.

Financing and Program Issues

21. The program is fully financed until its expiration. Tighter external financing is expected to be alleviated by $1 billion of the World Bank’s new DPF loan and $250 million from the German authorities. If needed, additional financing can be raised with a Eurobond issuance and/or from gross reserves, depending on financial market conditions.

22. Egypt’s capacity to repay is adequate, but risks remain. Fund credit outstanding as a share of gross reserves is projected to peak at 26.7 percent by the end of this year, and debt service to the Fund as a ratio of exports of goods and services would reach 0.9 percent in 2020/21 (Table 10). External risks have increased, as tightening global financial conditions have contributed to a pullback by investors from emerging markets, but Egypt remains well positioned to manage any increase in capital outflows. The CBE’s reserve position is strong, the current account and fiscal balances are improving, and the memorandum of understanding between the CBE and MoF on respective responsibilities for servicing Fund credit should ensure uninterrupted repayments.

23. The CBE continues the implementation of the 2017 safeguards recommendations, albeit with some delays. The CBE engaged a consulting firm to align its financial reporting practices with Egyptian Accounting Standards starting with the 2018 audit and continues to unwind its holding of FX deposits in foreign branches of domestic banks, with full divestment expected by end-June 2019. Draft amendments to the banking law to strengthen independence and governance of the CBE were submitted in December 2018 (end-September SB). However, the Fund has not yet received a management letter issued by the external auditor of the CBE for the 2017/18 financial year. Staff will continue to follow up.

Staff Appraisal

24. Egypt’s macroeconomic situation has improved markedly since the start of the program. Growth has accelerated; external and fiscal deficits have narrowed; international reserves have increased, and public debt, inflation, and unemployment have declined. Social protection was strengthened to ease the burden of adjustment on the poor. The authorities’ structural reform agenda, which aims at promoting private sector-led inclusive growth and job creation, has improved Egypt’s position among peers. The remainder of the program focuses on consolidating the gains in macroeconomic stabilization and advancing reforms to strengthen medium-term growth prospects.

25. The outlook is positive, but a more difficult external environment is posing new policy challenges. Under the programmed policies, growth should continue to strengthen, inflation and public debt decline, and the current account deficit narrow. The tightening of global financial conditions has led to capital outflows, pressure on the external accounts, and higher borrowing costs. Risks include any realization of contingent liabilities which could increase public debt, an increase in global oil prices, a deterioration of the security situation that would disrupt the recovery in tourism, resistance from vested interest that could weaken reform momentum. These risks highlight the importance of sound policies to accelerate structural reforms and further strengthen policy buffers, including by enhancing exchange rate flexibility, preserving adequate international reserves, and reducing public debt.

26. Exchange rate flexibility and a prudent monetary stance are critical to preserve macroeconomic stability. While the recent resurgence of inflation was caused by transitory factors, staff supports the CBE’s intention to maintain a restrictive monetary policy stance until the disinflation trend is firmly reestablished. The repatriation mechanism and the sale of foreign exchange by some large state-owned banks in excess of regulatory limits on net open FX positions have prevented the exchange rate from moving with supply and demand. Therefore, staff welcomes the decisions to eliminate the repatriation mechanism and to strengthen the enforcement of regulatory rules on open FX positions of banks. To support the credibility of the monetary policy framework, monetary financing of the deficit should be minimized.

27. This year’s budget is on track to achieve a primary surplus of 2 percent of GDP, which would complete the programmed fiscal adjustment of 5.5 percent of GDP in three years. Projected at 86 percent of GDP by end-2018/19, general government debt remains high and the related interest cost poses a heavy burden on public finances and risks crowding out social spending. To address Egypt’s challenging debt burden, it will be important to maintain primary surpluses at around 2 percent of GDP over the medium term. Implementing structural reforms to raise GDP growth is also essential. At the same time, more tax revenue is needed to create fiscal space for spending on human capital, infrastructure, and social protection. To this end, the authorities are implementing a Medium-Term Revenue Strategy, supported by the Fund technical assistance.

28. The fuel subsidy reform is advancing. The authorities remain committed to reaching cost-recovery prices for most June products by mid-June 2019. This will encourage energy efficiency, attract investment in more labor-intensive industries, and free up fiscal space for high-priority expenditures, including targeted cash transfers to poor households. The automatic fuel price indexation mechanism is critical to preserve cost-recovery levels and, once full cost recovery is reached, to safeguard the budget from re-emergence of subsidies, which benefit the wealthy more than the poor.

29. The banking sector remains healthy, but the NIB needs to be restructured. The authorities are reviewing NIB’s operations to revise its mandate and business model and ensure that it has a commensurate financial structure. The two largest public banks are financially stable but may require additional capital in the next two years if strong lending growth continues. Several smaller banks, whose financials are below sector averages, will require CBE’s continued monitoring.

30. Structural reforms aim to strengthen the business environment, improve transparency and promote inclusive growth and job creation. Egypt’s growth model needs to evolve by allowing the private sector to take the lead in investment and job creation. This has been impeded by long-standing problems of weak governance, poor competition, inadequate access to land, and heavy presence of the state in the economy. To address these constraints, the authorities have launched reforms of competition policy, the public procurement system, management and transparency of SOEs, industrial land allocation, and management of public finances. These reforms have the potential to significantly improve the investment climate and governance, and reduce opportunities for rent seeking and corruption. To make them enduring, the reform efforts should be stepped up and carried forward beyond the program period. The pickup in growth in the medium term assumes sustained implementation of reforms.

31. Staff supports the authorities’ request for the completion of the fourth review under the Extended Arrangement. Staff also supports the request to establish end-March 2019 PCs for the fifth review.

Figure 2.
Figure 2.

Egypt: Real and External Sector Developments

Citation: IMF Staff Country Reports 2019, 098; 10.5089/9781498306676.002.A001

Sources: Egyptian authorities; IMF, International Financial Statistics; and IMF staff calculations and projections.
Figure 3.
Figure 3.

Egypt: Fiscal Sector Developments

Citation: IMF Staff Country Reports 2019, 098; 10.5089/9781498306676.002.A001

Sources: Egyptian authorities; IMF, International Financial Statistics; Bloomberg; and IMF staff calculations and projections.
Figure 4.
Figure 4.

Egypt: Monetary Sector Developments

Citation: IMF Staff Country Reports 2019, 098; 10.5089/9781498306676.002.A001

Sources: Egyptian authorities; International Financial Statistics; Bloomberg; and IMF staff calculations and projections.
Table 1.

Egypt: Selected Macroeconomic Indicators, 2015/16–2019/20 1/

article image
Sources: Egyptian authorities; and IMF staff estimates and projections.

Fiscal year ends June 30.

General government includes the budget sector, the National Investment Bank (NIB), and social insurance funds.

Budget sector comprises central government, local governments, and some public corporations.

The primary balance for 2017/18 excludes the recapitalization of the CBE for EGP 6 billion.

Includes multilateral and bilateral public sector borrowing, private borrowing and prospective financing.

Debt at remaining maturity and stock of foreign holding of T-bills.

Table 2a.

Egypt: Balance of Payments, 2015/16–2022/23

(In billions of U.S. dollars, unless otherwise indicated)

article image
Sources: Central Bank of Egypt; and IMF staff estimates and projections.

EGPC arrears.

Table 2b.

Egypt: Balance of Payments, 2015/16–2022/23

(In percent of GDP, unless otherwise indicated)

article image
Sources: Central Bank of Egypt; and IMF staff estimates and projections.

EGPC arrears.

Table 3a.

Egypt: Budget Sector Operations, 2015/16–2022/23 1/

(In billions of Egyptian pounds, unless otherwise indicated)

article image
Sources: Ministry of Finance; and IMF staff estimates.

Budget sector comprises central and local governments, and some public corporations. Fiscal year ends June 30. Cash basis.

Food subsidies include subsidies paid to farmers.

The primary balance for 2017/18 excludes the recapitalization of the CBE for EGP 6 billion.

Oil revenue minus fuel subsidies. Oil revenue includes corporate income tax receipts from EGPC and foreign partners, royalties, extraordinary payments, excise taxes on petrol products, and dividends collected from EGPC.

Includes debt issued to the SIF for settlement of past arrears and implied future liabilities.

Table 3b.

Egypt: Budget Sector Operations, 2015/16–2022/23 1/

(In percent of GDP)

article image
Sources: Ministry of Finance; and IMF staff estimates.

Budget sector comprises central and local governments, and some public corporations. Fiscal year ends June 30. Cash basis.

Food subsidies include subsidies paid to farmers.

The primary balance for 2017/18 excludes the recapitalization of the CBE for 6 billion Egyptian pounds.

Oil revenue minus fuel subsidies. Oil revenue includes corporate income tax receipts from EGPC and foreign partners, royalties, extraordinary payments, excise taxes on petrol products, and dividends collected from EGPC.

Includes debt issued to the SIF for settlement of past arrears and implied future liabilities.