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IMF urges Egypt to watch inflation after new subsidy cuts

Wednesday 04 July 2018 02:11 PM


The International Monetary Fund urged Egypt to maintain a tight monetary policy as a new round of subsidy cuts rekindled inflation worries.
The Washington-based lender praised Egypt’s implementation of economic reforms as “instrumental in achieving macroeconomic stabilization, with external and fiscal deficits narrowing, inflation and unemployment declining, and growth accelerating.”
At the same time, the central bank “should retain its restrictive stance to counter second-round effects of fuel and electricity price increases,” the IMF added in a statement following its latest review of the country’s reform program.
The assessment came days after the central bank held the benchmark interest rate. Inflation in May was down to about 11 percent after peaking last year at over 30 percent following the November 2016 flotation of the pound. The bank predicted average annual headline inflation would remain within its target range of 13 percent (+/-3 percentage points.)