All publications by tag «IMF»
To strengthen financial sector stability, Directors encouraged the authorities to take measures to bolster supervision, and move forward with plans to restructure the statemdash;owned banks that dominate the banking system. They also encouraged strengthening the legal framework of the Central Bank, eliminating a remaining exchange restriction and a multiple currency practice, and accelerating implementation of AML/CFT and antimdash;corruption measures. Directors considered that the peg to the U.S. dollar, which provides a key anchor to the economy, remains appropriate.
The completion of the second review allows the authorities to draw the equivalent of SDR 584.2 million (about US$ 824.8 million), bringing total disbursements to SDR 1494.2 million about US$ 2109.7 million. The SDR 3.831 billion arrangement (about US$5.34 billion at the time of approval of the arrangement) was approved in July, 2016 and the first review was completed on December 5, 2016.
The European Union could do more to convince countries to put EU reform recommendations into practice. For example, targeted support from the EU budget could be provided to incentivize reforms. The EU should also continue pushing for greater integration of the energy, transport, and digital markets.
Non-oil growth is projected to pick up to 1.7 percent in 2017, but overall real GDP growth is expected to be close to zero as oil GDP declines in line with Saudi Arabia’s commitments under the OPEC+ agreement.
Directors underscored that accelerated structural reforms and broader trade relations can help promote a diversified export mix. They also urged the authorities to strengthen property rights, advance privatization, improve governance, and invest in innovation and infrastructure to build the foundations for higher potential growth.
The economy is weathering the post-2014 oil shock well. The key policy goal is to foster economic adjustment to the new oil market realities. To foster the adjustment, especially given downside risks, the momentum in fiscal reforms needs to be sustained and coordinated with structural reforms. To ensure credibility, fiscal adjustment should be accompanied by strengthening the medium-term policy framework and improving transparency. Ongoing initiatives to upgrade the supervisory and regulatory framework for the financial sector are welcome and need to continue. Focused, multi-pronged initiatives to raise productivity and diversify the economy would improve medium-term economic prospects. Amid ongoing economic adjustment, continued improvements in statistics are critical for enhancing policy analysis and decision-making.
Directors observed that the financial sector has remained sound despite the severe stresses. To make the system more robust, they encouraged actions to further strengthen financial safety nets through enhanced monitoring and an improved crisis management framework. Directors underscored the need for continued vigilance and close monitoring of the health of the corporate sector and its impact on the banking system.
The approval by the IMF Executive Board of the First Review of the program shows the IMF’s strong support for Egypt in these efforts.
“The current period of growth should be used as an opportunity: to further safeguard the financial sector--by building up capital buffers and strengthening corporate and bank balance sheets; to address the issue of stagnant real wages--which can undermine the recovery and fuel discontent; and to confront the problem of excessive current account imbalances--with both surplus and deficit countries playing their part."
All in all, in our judgement, the U.S. economic model is not working as well as it could in generating broadly shared income growth.