IMF says Egypt makes mixed reform progress, cites state dominance of economy
In its long-delayed staff report for the fourth review of Egypt's programme, the IMF said there had been limited headway in reducing the role of state- and military-owned firms which enjoy preferential treatment in the form of tax exemptions, access to prime land and cheap labour.
These companies remain largely shielded from public scrutiny, with "very limited transparency about their financial condition", the fund said.
Egypt's reliance on a state-led growth model, centred on mega-projects and public investment, was curbing job creation and stifling the private sector in an increasingly volatile global environment, it said.
"The resulting financial and resource distortions have left Egypt with a large informal economy and few buffers against growing global financial, geopolitical and climate shocks," the fund said.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
TimesLIVE
8 hours ago
- TimesLIVE
Senegal unveils recovery plan to rely on domestic funding
Prime Minister Ousmane Sonko on Friday unveiled a new economic recovery plan for Senegal, pledging to finance 90% of the initiative through domestic resources and avoid additional debt. The plan, aimed at stabilizing the finances of a West African nation that began producing oil and gas last year, comes with Senegal facing financial challenges and scrutiny over debt misreporting. The country is grappling with billions of dollars in hidden debts from the previous administration, which led to the International Monetary Fund (IMF) freezing its loan programme. "We have identified more than 4.6-trillion CFA francs [R145.81bn] in available resources between 2025 and 2028, without increasing the state's debt," Sonko said during a presentation in the capital Dakar. The plan to cut public spending and boost revenues aims to help narrow the budget deficit to 3% of GDP by 2027 from 12% in 2024. Its measures include merging and downsizing state institutions, which the government estimates could save around 50-billion CFA francs (R1.59bn), and scrapping tax exemptions in certain sectors, particularly in the largely untaxed digital economy. He cited online gaming and mobile money as examples.
TimesLIVE
4 days ago
- TimesLIVE
Zambia wants to extend IMF loan programme by 12 months
Zambia's government wants to extend its International Monetary Fund (IMF) programme another 12 months beyond its current expiry at the end of October, a cabinet statement said on Wednesday. The copper-rich Southern African nation has been trying to get its public finances back on track with IMF support after running up a huge debt pile. Its 38-month extended credit facility was approved in August 2022 for an initial $1.3bn (R23.54bn) but was later increased to $1.7bn (R30.78bn). So far about $1.55bn (R28.06bn) has been disbursed. The cabinet statement said finance minister Situmbeko Musokotwane had been authorised to ask the IMF for the 12-month extension. "The objective is to consolidate the gains achieved during the programme period into 2026" and help support economic reforms, the statement said.
The Citizen
5 days ago
- The Citizen
IMF keeps SA growth forecast unchanged but increases global growth forecast
The IMF has more hope for global economic growth than for South Africa's economic growth, with US tariffs shaping the outlook. The International Monetary Fund (IMF) has kept South Africa's growth forecast unchanged at 1% for 2025, but increased its global growth forecast to 3% for this year. Although it is more optimistic about economic growth, the IMF has warned that US tariffs could be higher than expected. South Africa's growth is forecast to increase to 1.3% in 2026, while the global growth forecast to 3% increased from 2.8% in the April forecast, with the 2026 forecast at 3.1%. Presenting the IMF's latest World Economic Outlook Update, Pierre-Olivier Gourinchas, economic counsellor and director of the research department at the IMF, said global trade developments continue to shape the global economic outlook. 'After an unprecedented escalation in tariffs imposed on the rest of the world in April, the US partly reversed course, pausing the higher tariffs for most of its trading partners. This and a de-escalation of trade tensions with China in May, modestly reduced the US effective tariff rate from 24% to about 17%. 'Despite these welcome developments, tariffs remain historically high and global policy remains highly uncertain, with only a few countries reaching fully fleshed out trade agreements. This modest decline in trade tensions, however fragile, contributed to the resilience of the global economy so far.' ALSO READ: IMF cuts SA's economic growth projection – again This also helped global growth forecast, IMF says Gourinchas pointed out that these developments also helped: Concerns about future tariffs led to a strong surge in exports to the US in the first quarter of the year. This front-loading helped support activity in Europe and Asia. Financial conditions improved and monetary conditions eased as global inflation continues to recede, largely unchanged from the IMF's previous projections. The dollar depreciated by roughly 8% since January. 'As we already pointed out in April, the effect of tariffs on exchange rates can be complex. Previously, the tariffing country saw its currency appreciate, buffering the impact of the tariffs. However, this time around, the dollar depreciation amplified the impact of the tariff shock on other countries' competitiveness. With a stable value relative to the US dollar, the Chinese RMB tracked the dollar while the euro appreciated significantly. 'Accordingly, we revised our growth projections upwards from the April 2025 reference forecast, from 2.8% to 3.0% this year and from 3.0% to 3.1% next year.' He said most regions are experiencing modest growth upgrades this year as well as next year, but warned that while this resilience is welcome, it is also tenuous. 'While the trade shock could turn out to be less severe than initially feared, it is still sizeable and evidence is mounting that it is hurting the global economy. For instance, compared to our pre-April forecast, global growth is revised downwards by 0.2 percentage points this year. At around 3%, global growth remains disappointingly below the pre-Covid average.' ALSO READ: G20 finance officials say downside risks dominate global economic outlook – IMF IMF also forecasts persistent decline in global trade due to US tariffs The IMF also continues to project a persistent decline in global trade as a share of output despite the recent front-loading, from 57% in 2024 to 53% in 2030. Gourinchas says risks to the global economy remain firmly to the downside, while the current trade environment remains precarious. 'Tariffs could well reset at much higher levels once the 'pause' expires on 1 August or if existing deals unravel. If this were the case, model-based simulations suggest global output would be 0.3% lower in 2026. 'Without comprehensive agreements, the ongoing trade uncertainty could increasingly weigh on investment and activity. In addition, while exports front-loading supported global activity so far, firms could become vulnerable if the demand for stockpiled goods does not materialise.' Gourinchas points out that the geopolitical environment also remains fragile, with a potential for more negative supply disruptions. 'While global inflation continues to decline, the latest price data suggests that inflation pressures are building gradually in the US. 'Overall, US import prices in dollars remained largely unchanged or even increased this year, suggesting that the cost of tariffs will be borne by US retailers, and eventually customers, as firms start to pass through higher costs into their prices.' He says in too many countries, the combination of high public debt and still elevated public deficits continue to be a cause for concern. 'The lack of fiscal space makes these countries especially vulnerable to a sudden tightening in financial conditions that increase term premia. 'Such tightening becomes even more likely if central bank independence, a cornerstone of macroeconomic, monetary and financial stability, is undermined.' ALSO READ: IMF's bad news about economic growth for SA, thanks to Trump tariffs IMF key priorities to restore stability in trade policy The IMF also continues to call for prudence and the need for improved collaboration. Gourinchas says some key priorities are:
