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IMF praises Egypt economic reforms

September 27, 2017 at 12:06 pm

International Monetary Fund (IMF) [World Bank Photo Collection/Flickr]

The International Monetary Fund (IMF) has praised the Egyptian government’s plan to reform the economy, which include an increase in electricity tariffs and a rise in fuel prices in November 2016 and June this year.

In its report on the state of the Egyptian economy, the IMF described the decision to increase the prices as “very important” steps, stressing the importance of completing the government’s plans to reform the energy support system.

The report pointed to the Egyptian authorities’ intention to increase fuel prices to achieve full recovery of the cost of capital and complete the reform of the energy sector. With regard to macroeconomic forecasts, it said that they have recently improved the inclusion of a larger-than-expected consumption impact.

The IMF document addressed the programme’s financial and exchange rate policies, noting that “the Central Bank of Egypt has adopted a more stringent fiscal policy in an effort to contain inflation.”

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The launching of the reform programme, said the IMF, is a shift from old policies which had led to significant imbalances.

In July, Egypt increased domestic electricity prices by between 18 and 42.1 per cent for the current fiscal year 2018/2017. The government in Cairo also increased fuel prices for the second time at the end of June by between 5.6 and 100 per cent. It has been implementing an economic reform programme since last year, including the adoption of value-added tax, cuts in energy subsidies and floating the Egyptian pound in order to revive the economy.