'High financing costs & EGP depreciations’ behind lowering growth forecast for Egypt: IMF
Brooks made these remarks during a press briefing in Washington DC to release its World Economic Outlook report on the sidelines of the IMF’s and the World Bank Group’s (WBG)’s spring meetings, being held through 16 April.
Earlier today, in its World Economic Outlook (WEO) report, the IMF revised down its forecast for real GDP growth in Egypt to 3.7 percent in 2023, down from the 4 percent it had projected in January and 4.4 percent in October of last year.
The IMF also downgraded its expectations for the country's real GDP growth in 2024 to 5 percent from the 5.3 percent it had projected in January.
During the press briefing, Brooks stressed that Egypt is facing a challenging economic outlook in a way similar to many other countries worldwide.
“We have downgraded our forecasts for this year by 0.3 percent and the same for the coming year, mainly driven by the external environment and the very high financing costs that Egypt is really experiencing," he explained.
Egypt is currently engaged with the IMF in an Extended Fund Facility (EFF) programme that allows Egypt to receive a loan worth $3 billion over four years as part of the country’s efforts to overcome its financing gaps.
The IMF estimates that Egypt faces a financing gap of $17 billion through FY2025/2026.
Brooks explained during the briefing that the IMF found that the economy was affected negatively by the depreciation of the Egyptian currency in addition to the continued backlog of imports at ports as well as the impacts of the war in Ukraine.
“All these factors have lowered business and consumer confidence and that’s why our forecasts for the country’s real GDP have been lowered,” he stressed.
In response to a question from Ahram Online on when to expect the IMF’s first review of the loan deal, Brooks noted that the fund started conducting the review on schedule and will release its findings upon completion.
The first review, which was scheduled to be conducted on 15 March, paves the way for Egypt to receive the second tranche of the loan worth $347 million.