EX-POST EVALUATION of EXCEPTIONAL ACCESS UNDER the 2020 STAND-BY ARRANGEMENT IMF Country Report No. 22/237, July 2022

Abstract

BackgroundThe IMF's financial support to the Egyptian authorities' policy response to the COVID-19 pandemic in 2020 included exceptional access to Fund resources.'The Ex-Post Evaluation (EPE) assess whether program objectives under the 12-months arrangement were achieved, whether the macroeconomic strategy, program design, and financing were appropriate to address the challenges Egypt faced at the time.In early 2020, the Egyptian authorities launched a broad policy response to address the immediate and severe economic disruption caused by the COVID-19 pandemic, which threatened to reverse Egypt's hard-won achievements in regaining macroeconomic stability.The overarching goal of Fund support was to maintain macroeconomic stability amid the crisis, allowing for the easing of fiscal, monetary, and financial policies to support the crisis response and for thus achieving health and social policy objectives during the pandemic.The Standby Agreement (SBA) aimed at safeguarding medium-term fiscal sustainability and at keeping the momentum in selected structural reform areas, mostly building on initiatives that began during the 2016-19 Extended Fund Facility (EFF).The SBA, which expired on June 25 2021, achieved its primary objective of maintaining macroeconomic stability in the context of the disruption from the COVID-19 pandemic.This allowed for the easing of fiscal, monetary, and financial policies to support the crisis response, including by increasing spending on health and social protection while safeguarding debt sustainability and preserving investor confidence.Momentum was kept on structural reforms in selected areas.Policy implementation under the SBA was broadly in line with program objectives, even as exchange rate variability remained limited.While the Egyptian economy has successfully weathered the COVID-19 shock, the external and debt vulnerabilities that existed prior to the crisis remain high. Success and Challenges after the Extended Fund FacilityEgypt's macroeconomic situation had improved markedly during the 2016-2019 EFF. Critical macroeconomic reforms implemented by the authorities to correct significant external