Sunday , April 11 2021

The IMF warns Egypt of increasing indebtedness

On Tuesday, the International Monetary Fund (IMF) said that oil producers in the Middle East, North Africa, Afghanistan and Pakistan are at high risk because the level of public debt remains high.

"These high levels leave countries with a limited fiscal policy to finance financial costs or the effects of rising oil prices," he said in a report released today.

Among the oil producing countries included in the report are Egypt, Morocco, Djibouti, Jordan, Lebanon, Mauritania, Somalia, Sudan, Syria, Tunisia, West Bank, Gaza Strip, Afghanistan and Pakistan.

Public debt will exceed 90% of GDP in almost half of the countries in the country in 2018. A large part of this debt (52%) is denominated in foreign currency and will largely be in the near future.

The figure in the report shows that it receives most of the debt in the second half of this fiscal year and is approaching $ 7 billion.

"Interest rates are high and growing, with more than 20 percent of revenue being used in 2017, compared to 17 percent in 2016," the report said.

The Fund considered that these large debt obligations limit the possibility of using more savings or revenue to increase growth-supporting spending.

In recent years, Egypt has extended a foreign loan to finance the budget deficit and to maintain the exchange rate to maintain the exchange rate.

Egyptian foreign debt at the end of the last fiscal year was $ 92.64 billion, up 17.2 per cent on the previous year.

The government expects total external debt to rise to approximately $ 102.863 billion in the next fiscal year 2019-2020, compared with $ 98.863 billion expected in the current 2018-2019 fiscal year, according to Reuters earlier this month.

Future prospects make it difficult for fiscal discipline in a tight financial environment and by extending the tax base and reducing tax exemptions, it could encourage increased revenue growth, the report said.

"Supporting reform is a very important prerequisite, including mechanisms for automating fuel prices," the IMF said.

The report identified Egypt and Tunisia by saying that the automatic correction of fuel prices avoids the risk of reversal and creates investment support to support the growth of the space required.

"This should be accompanied by improved expenditure efficiency through effective assessment, prioritization and the implementation of infrastructure projects."

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