Egypt will need between 12 and 18 months to bring inflation down to the Central Bank of Egypt's (CBE) target, said International Monetary Fund (IMF) country mission chief Ivanna Vladkova Hollar on Tuesday. The CBE's target for inflation is set at 7 percent (±2 percent) in the fourth quarter of 2024 and 5 percent (±2 percent) in the fourth quarter of 2026. "We should see a significant decline in inflation over the course of the year," Hollar told reporters during a virtual meeting. While acknowledging the impact of fuel price increases on the cost of living, Hollar stressed that these adjustments are necessary to achieve cost recovery. "There has been a lot of pressure on the cost of living from the price increases that we've seen over the last 18 months." "And from that perspective, it's important to use the information on distributional effects to design good introduction policies," she stated. To mitigate the social impact of these measures, the IMF official advocated for targeted support to vulnerable populations. She highlighted the disproportionate benefits of fuel subsidies to wealthier segments of society and emphasised the importance of reallocating these funds towards more effective social protection programmes. "We hope to continue the dialogue with the Egyptian authorities... as they move forward with the difficult reform agenda. The social considerations are well integrated into policy design, and we will look to highlight that going forward in the program", Hollar noted. The IMF official expressed optimism about Egypt's ongoing reform efforts and its commitment to considering social impacts in policymaking.
