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|24 September, 2018

IMF says Egypt's structural reforms key for sustainable development

IMF managing director Christine Lagarde has praised Egypt's economy saying it was showing "strong signs of recovery" under a three-year reform plan

Image used for illustrative purpose. International Monetary Fund logo is seen outside the headquarters building during the IMF/World Bank spring meeting in Washington, U.S., April 20, 2018.

Image used for illustrative purpose. International Monetary Fund logo is seen outside the headquarters building during the IMF/World Bank spring meeting in Washington, U.S., April 20, 2018.

REUTERS/Yuri Gripas

CAIRO - IMF managing director Christine Lagarde has praised Egypt's economy saying it was showing "strong signs of recovery" under a three-year reform plan, and stressed the importance of structural reforms to achieve more sustainable development.

Egypt has implemented tough reforms under a $12 billion loan program agreed in late 2016 that involved deep cuts to energy subsidies, new taxes, and a floated currency in a bid to draw back investors who fled after its 2011 uprising.

Financial markets have been closely watching how the government keeps to the terms of the deal, which has helped Cairo receive loan installments on schedule.

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In a statement after she met with Egyptian President Abdel Fattah al-Sisi in New York on Sunday, Lagarde said the IMF remained committed to supporting Egypt.

"Egypt’s economy is showing strong signs of recovery, and its economic growth is among the highest in the Middle East," Lagarde said in the Sept. 23 statement.

She said she agreed with Sisi on the importance of capitalising on Egypt's "macroeconomic gains to advance the authorities’ home-grown structural reforms".

"These reforms will help achieve more sustainable, inclusive and private-sector led growth which will help create jobs for Egypt’s young population, while also ensuring adequate resources are available for social protection," she added, according to the statement.

Egypt's inflation, which had soared to a record high of more than 33 percent in July 2017 after the import-dependent country floated the Egyptian pound in November 2016, eased to its lowest level in almost two years in May.

Core inflation in August stood at 8.83 percent while foreign reserves reached $44.419 billion compared with $36.143 billion in the same month last year.

Egypt in June raised fuel and electricity prices as part of the reforms agreed under the IMF plan in measures that had made it harder for ordinary Egyptians to make ends meet. Another fuel price rise is scheduled next year.

(Reporting by Sami Aboudi; Editing by Edwina Gibbs) ((Sami.Aboudi@thomsonreuters.com; +20223948181;))