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Egypt’s non-oil activity shrinks for 28th straight month as inflation shoots

Published

2 years ago

April 4, 2023

A recent survey by S&P Global on Egypt’s economy has revealed the country’s non-oil private sector activity shrank for the 28th straight month in March.

The survey shows that currency restrictions and rising inflation also affected businesses.

In January, the non-oil economy suffered a sharp contraction in operating conditions, as a depreciation of the pound drove a rapid acceleration in price pressures.

The S&P Global Egypt Purchasing Managers’ Index (PMI) edged down to 46.7 in March from 46.9 in February, well below the 50.0 threshold that marks growth in activity.

According to S&P Global economist David Owen, “at 46.7, the headline PMI signaled a further solid deterioration in the performance of non-oil companies, driven by steep falls in activity and new business volumes”.

“Steep inflationary pressures and a drop in client demand continued to negatively impact non-oil businesses, chiefly through a sharp reduction in new orders.

“Output levels fell at a marked rate across the non-oil private sector during March, in part due to ongoing difficulties with accessing key inputs due to import controls and currency restrictions.

“Despite picking up to a three-month high, the year-ahead outlook for activity was still among the weakest recorded since the series began in early-2012,” S&P wrote.

Despite the Egyptian pound depreciating by half since March 2022 and a $3 billion IMF assistance package signed in December, Egypt remains short of foreign currency.

According to the state statistics organization, headline inflation soared to 31.9% in February from 25.8% in January, while core inflation went up to 40.26%.

Egyptian economist, Sherif Kamel had predicted that Egypt’s economy in 2023 would be challenging, given the expected repercussions of the global recession, rising inflation, and currency uncertainty.

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IMF mission concludes 4th loan program assessment in Egypt

Published

10 hours ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.