Egypt “has not asked for financial support,” but the International Monetary Fund will consider offering support “in the same way that we would to any other member”, said Masood Ahmed, director of IMF’s Middle East and Central Asia department Monday during a press briefing on the region’s economic outlook.
Gulf State support has provided Egypt with “much needed breathing space” and allowed the country to deal with current economic pressures, he said, but it should not be considered a substitute for reforms targeting Egypt’s long-term economic development.
The Kingdom of Saudi Arabia pledged $5bn to Egypt in the form of grants, deposits and petroleum products. The United Arab Emirates announced in July the provision of a $3bn aid package to Egypt comprised of a $1bn grant and a $2bn interest-free deposit at the Central Bank of Egypt. In September, UAE crown prince Mohammed bin Zayed Al-Nahyan pledged to send $2bn in additional aid to Egypt in the form of deposits and grants, paving the way for a $4.9bn agreement. Kuwait also pledged a $4bn to Egypt.
Despite the assistance packages, however, Christopher Jarvis, IMF’s chief of mission in Egypt, said the country still needs financial support to achieve economic growth. He suggested financial support could come from various financial institutions, including the IMF and the Gulf countries.
Egypt’s most pressing economic challenge is the need to address “imbalances in the budget”, Ahmed said.
The second is to generate the “kinds of high growth rates” necessary to create jobs and improve living standards for Egyptians, he said.
“There is no doubt that it is harder to implement reforms during a period of uncertainty and during a period of transition,” Ahmed said, adding that reforms that need political consensus are harder to implement.
Looking at the experience of other countries, however, Ahmed said he believes the reforms in Egypt can be done.
