World Economy Improvement Raises IMF Concern over Egypt

World Economy Improvement Raises IMF Concern over Egypt
TT
20

World Economy Improvement Raises IMF Concern over Egypt

World Economy Improvement Raises IMF Concern over Egypt

The International Monetary Fund (IMF) has placed the monetary policies adopted by the central banks of US and Europe as top risks facing the Egyptian economy during the coming period, knowing that these policies would contribute to the re-balance of the dollar and Euro against the Egyptian pound.

The United States and Europe started after the world financial crisis to apply exceptional monetary policies that aim at keeping the interest rates low and interfering fiercely in the bond market to rescue the economy from recession.

As the signs of economic re-balance started to show, these two economic entities started to withdraw gradually from the monetary policies. Commenting on these policies, the IMF said that in case any unexpected transformations took place in the world financial condition, this would weaken the market's attraction towards Egyptian pound bonds.

Egypt depends on Euro bonds as one of the major sources to fill the gap of foreign currency resources amidst a fragility shown by the tourism sector in light of the security crises and the failure of foreign investments to reach the targeted average determined by the government. Egypt sold international bonds worth USD1.5 million in June 2015, for the first time since the January revolution in 2011. Further, it signed a loan deal in November under the framework of foreign funding.

IMF warned from risks of the rise in oil prices, which would weaken the balance of the current account, increase the subsidy of fuels and affect negatively the public debt. On the local level, the fund warned from the slump of economic reforms whether due to exhaustion from reform procedures, the resistance from business owners or the authorities concerns regarding social tensions.

It also warned from unannounced interventions in the currency exchange market in order to control the currency value.



IMF's Georgieva Says US Tariffs Represent Significant Risk to Global Outlook

International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US September 4, 2018. REUTERS/Yuri Gripas/File Photo 
International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US September 4, 2018. REUTERS/Yuri Gripas/File Photo 
TT
20

IMF's Georgieva Says US Tariffs Represent Significant Risk to Global Outlook

International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US September 4, 2018. REUTERS/Yuri Gripas/File Photo 
International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US September 4, 2018. REUTERS/Yuri Gripas/File Photo 

Sweeping tariffs announced on Wednesday by US President Donald Trump pose a significant risk to the global economy at a time when growth has been sluggish, the head of the International Monetary Fund said in a statement on Thursday.

IMF Managing Director Kristalina Georgieva said it was important to avoid steps that could further harm the global economy and appealed to the United States and its trading partners to work constructively to reduce tensions, according to Reuters.

“We are still assessing the macroeconomic implications of the announced tariff measures, but they clearly represent a significant risk to the global outlook at a time of sluggish growth,” Georgieva said in her strongest comments to date on the risks posed by the US trade actions.

“It is important to avoid steps that could further harm the world economy. We appeal to the United States and its trading partners to work constructively to resolve trade tensions and reduce uncertainty.”

Georgieva said the IMF would provide its assessment of the announced tariffs when it releases an update to its World Economic Outlook during the April 21-26 meetings in Washington, DC, that bring together members and shareholders of the IMF and the World Bank.

The head of the global lender on Monday told Reuters that Trump's push for wide-ranging tariffs was creating great uncertainty and denting confidence, but it was not likely to trigger a near-term recession.

At the time, Georgieva said the IMF would likely lower the economic outlook slightly, adding “we don't see recession on the horizon.”

The US tariffs announced on Wednesday went far beyond the levels that had been predicted or expected by trade experts.