Egypt's Work on IPO Program and FX Shortage Mitigation Earns Praise from IMF

egypt Mon, Jul. 17, 2023
Acknowledging the Egyptian government's recent strides in progressing its Initial Public Offering (IPO) Program, the International Monetary Fund (IMF) has praised Egypt’s support for these measures aimed at supporting the private sector and easing the dollar shortage.

Julie Kozack, Head of the IMF's Communication Department, spoke during a hybrid press briefing held on Thursday, welcoming the progress and emphasizing the significance of divestment in the Extended Fund Facility (EFF)-supported program.

“We welcome the Egyptian authorities’ announcement that they have signed contracts to sell equity stakes in state-owned entities worth $1.9 billion US. Divestment, as I noted, is a critical component of the [Extended Fund Facility] supported program, supporting the gradual withdrawal of the state from economic activity and providing resources for external financing and debt reduction,” Kozack explained.

Furthermore, the government unveiled its strategy to address the shortage of US dollar liquidity in the local market, aiming to attract approximately $191 billion annually over the next three years. The primary sources will include Suez Canal revenues, remittances, and commodity exports, among other resources.

Kozack emphasized that this announcement signifies important progress in implementing a crucial element of the comprehensive policy package which aims to restore macroeconomic stability.

“The IMF remains engaged with the Egyptian authorities to pave the way for completion of the first review of the EFF. This includes [the] steady implementation of the divestment strategy in introducing policies that provide for competitive neutrality for all firms to promote a level playing field and sustainably moving toward a flexible exchange rate to alleviate foreign exchange shortages,” she explained.

In an unrelated press conference last week, Madbouly disclosed the Egyptian government's goal to raise the volume of remittances received from Egyptian expatriates by 10% annually over the next three years, aiming to reach approximately $45 billion in 2026. Over the past decade, Egypt has received over $219.4 billion in remittances from its citizens working abroad, according to the Central Agency for Public Mobilization and Statistics (CAPMAS).

Despite a 10% decline in remittances in 2022, with a total of $28.3 billion, Egypt was ranked among the leading recipients of remittances in the Middle East and North Africa (MENA) region for the same year, as reported by the World Bank in June. Additionally, Egypt secured the sixth position among low and medium-income countries in terms of remittance receipts for 2022.