IMF official: Egypt's anti-COVID 19 measures decisive and support economy

Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF) Jihad Azour said the measures taken by Egypt to curb the outbreak of novel coronavirus are decisive. Thu, Apr. 16, 2020
CAIRO - 16 April 2020: Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF) Jihad Azour said the measures taken by Egypt to curb the outbreak of novel coronavirus are decisive.

He added that these measures have been backed by a comprehensive stimulus package aimed at curbing the spread of the virus.

Azour added in a Thursday statement that the LE 100 billion stimulus package, announced by the government, has been meant to boost the national economy during the crisis.

He lauded the role of the Central Bank of Egypt in encouraging the economy by reducing the interest rate by 3 percent, providing necessary liquidity, setting restrictions on daily cash withdrawal and deposits and issuing high-yield savings certificates.

A flexible exchange price and strong reserves provide big protection to the national economy in critical situations, he added.

The monetary policy adopted by Egypt while confronting the virus aims at keeping inflation at a stable and low rate to run in line with CBE's short-term goals, he said.

He said the fund is ready to help Egypt if necessary, noting that the country has already sufficient foreign cash reserves. “We are in constant contact with the CBE and the Finance Ministry,” he added.

“Egypt did not apply for any funding due to the emerging crisis of the COVID-19 pandemic,” Azour said Wednesday April 15.

Azour added in a video conference on the sidelines of the spring 2020 meetings that the success of the Egyptian state in its economic reform program, which started in 2016, enabled the country to withstand external pressures. This comes in light of the strong reserves and big growth rate, as well as an efficient and effective banking sector.

The Central Bank of Egypt announced earlier in April that Egypt’s foreign reserves decreased by about $5.4 billion, recording $40 billion by the end of March 2020, clarifying that the decline came as a result of using the money to cover the Egyptian market's needs of foreign exchange, the drop in foreign investments and international portfolios.

Egypt's target of growth rate will dip to 5.1 percent from 5.6 percent in 2019/2020. The growth rate in Egypt slowed down during the third and fourth quarter to 5.2 percent and 4 percent, respectively.

Sisi has earlier ordered allocating LE 100 billion ($6.4 billion), to fund a coronavirus strategy and related precautionary measures.

IMF expected Egypt to record a growth rate of 2 percent during 2020, to be the only country that to achieve positive economic growth during the current fiscal year in the Middle East and North Africa (MENA).

IMF anticipated in its World Economic Outlook report that the rest of the countries in the region would record an economic downturn due to the spread of COVID-19.

During 2021, Egypt would have recorded real gross domestic product (GDP) of 2.8 percent, according to the report.

According to the fund's data, the entire MENA region will achieve an economic contraction of 3.3 percent during 2020.

“The economy of Saudi Arabia will shrink by 2.3 percent and the United Arab Emirates (UAE) by 3.5 percent in 2020, Qatar will record a contraction of 4.3 percent, Kuwait by 1.1 percent, Oman by 2.8 percent and Algeria by 5.2 percent all this year.”

IMF expected that the Moroccan economy would shrink by 3.7 percent, Tunisia by 4.3 percent, Jordan by 3.7 percent and Lebanon by 12 percent during 2020.

The World Economic Outlook report had expected a sharp contraction of 3 percent in global economic growth this year due to the spread of the coronavirus.

“The COVID-19 pandemic is inflicting high and rising human costs worldwide, and the necessary protection measures are severely impacting economic activity. As a result of the pandemic, the global economy is projected to contract sharply by –3 percent in 2020, much worse than during the 2008–09 financial crisis,” the report stated.

The report further added that in a baseline scenario, which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound, the global economy is projected to grow by 5.8 percent in 2021 as economic activity normalizes, helped by policy support.