IMF head suggests Egypt slow down pace of projects to safeguard macroeconomic stability

To avoid affecting its macroeconomic stability, Egypt may need to slow down the pace of its projects, said Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva during a press briefing held on Thursday.

“Egypt, like so many of our members, has experienced extraordinary pressures that come from the shocks of the last years,” the IMF MD explained, adding that the fund and Egypt have agreed on a “sound program that has three critical elements”.

The pillars include implementing a more flexible exchange rate or “exchange rate liberalization,” as well as boosting the private sector and increasing its role in the economy.  

The third pillar, Georgieva pointed out, is that it is important to moderate long-term investment projects; while these projects are “very important and very good for Egypt,” she added that the projects may undermine macroeconomic stability if the same pace is maintained as originally planned as they were designed under different circumstances.

Egypt is currently getting ready for a review of its 46-month $3 billion IMF loan in order to receive its second tranche under the Extended Fund Facility (EFF). After passing the review, Egypt will receive a tranche worth $347 million.

However, Egypt and the International Monetary Fund have yet to agree on a date for the initial review under the agreement signed in December, Jihad Azour, director of the IMF’s Middle East and Central Asia Department, explained to media on Thursday.

“We are now preparing to carry out the review. The teams are working, and I am confident that we would have a good outcome. I want to say that we have seen in Egypt a deeper understanding of the complexity of both the domestic and global environments,” noted Georgieva during her press conference.

Bloomberg recently cited unnamed sources, stating that the IMF is looking for Egypt to implement more reforms prior to its upcoming review.