Egypt records lowest GDP loss globally

Posted on October 8, 2020

• IMF predicts Egypt GDP to decline to 2.8% in FY202/21 • Egypt’s position, remains sustainable with medium term recovery prospects good, according to the IMF • Real GDP growth is expected to decline from an average of 5.5 % in FY2018/2019 to 2.8 % in 2020/2021 • Egypt’s growth is projected to recover to 5.5 % over the medium term. • Average inflation is expected to increase 6% in FY2019/2020 to 9% in 2020/2021 • Egypt’s financing gap is estimated at $14 billion during 2020/2021. • Egypt’s current account balance is projected to decline by 4.6 % in FY2020/2021 up from 4.3 % projected in FY2019/2020 • The trade balance is expected to recede by 8 % in FY2020/2021, and to continue to decline until FY2024/2025 when it is projected to decline by 11.3 % • Net foreign direct investment (FDI) is projected to decline to 2% , down from 2.6 % in FY2018/2019 and 3% in FY2017/2018, and to increase by 2.8 % in 2021/2022 and by 3.7 % in 2024/2025. • Net foreign assets are expected to increase to EGP 179 billion in FY2020/2021, up from EGP 176 billion in FY2019/2020, and to jump to EGP 1.130 trillion in FY2024/2025. • IMF’s emergency support under the Rapid Financing Instrument (RFI) is expected to help limit the decline in international reserves and provide financing to the budget for targeted and temporary spending, aimed at containing and mitigating the economic impact of the pandemic. • In May, the IMF’s Executive Board gave emergency financial assistance of $2.7 billion (100 percent of quota) under the RFI to meet urgent balance of payments due to Covid-19 pandemic • In June Egypt received the first tranche of the stand-by agreement loan worth $2 billion, out of $5.2 billion, to back the second wave of Egypt’s reforms.