In light of the current government decission to start a gradual reopening of the Egyptian economy...

In light of the current government decission to start a gradual reopening of the Egyptian economy despit Coronavirus still exist, suggest the appropriate macroeconomic policies mix (Monetary and fiscal policies) needed to speed up the economic recovery; taking into consideration that Egypt is currently

negotiating a financial agreement with the International Monetary Fund (IMF). This financial package is vital to the Egyptian econmy to fill the financial gap (The backage includes two arrangements, the first known as as“ Rapid Financing Instrument - RFI & the second known as Stand By Arrangement - SBA ”. Show how these suggested macroeconomic policies would achieve the targeted macroeconomic goals ( Hint: use aggregate demand and aggregate supply tools).

Solutions

Expert Solution

COVID-19 has forced most of the countries to take strict measures to stop the spread of Corona virus. The lockdown measures has led to business closures in most of the economy leading to huge economic loss to the economies around the world.

Egytian government has decided to gradually open the businesses in order to ease economic pain for most of the citizens.

Following are the policy mix ( monetary and fiscal ) measures that will ensure smooth opening of the economy.

Fiscal measures by the government should be increased government spending on labor intensive sectors such as construction and infrastructural development which will provide job opportunities to the masses with lease impact on inflation.

Government should also offer cash to the lower strata people who were affected the most due to the lockdown. This will not just provide them much needed support at such crucial time but would also help craete aggregate demand in the economy.

Reduction of taxes should also be offered to the businesses which will ensure their sustainability during and after the lockdown.

Monetary measures should be used generously by the central bank such as infusing more liquidity in the economy by bringing down interest rates which will incentivise businesses and people to borrow.

Central bank can also provide moratoriums for loan repayments to cushion economic pain for the people.

Sudden outflow of dollar has led to reduction in foreign exchange reserves which has led to steep depreciation of the local currency. IMF has provided $2.8 billion using RFI to the country to esnure smooth functioning of the economy.

Country should look at reviving exports and rationalising unnecessary imports at least in the short run to ensure availability of enough foreign exchange reserves.

Rahul Sunny answered 6 months ago

Next > < Previous

Related Solutions

What does a reopening of the economy mean for the stock market?

Reopening the economy is an example of an Agile project. Do you agree or disagree? Explain...

Reopening the economy is an example of an Agile project. Do you agree or disagree? Explain your answer.

Egypt is the second largest sugar producer in Africa. The Egyptian government encourages the production of...

Egypt is the second largest sugar producer in Africa. The Egyptian government encourages the production of beet sugar especially in the northern part of the country because it is less water intensive than sugarcane. In 2007/2008 sugar production was about 1.67 million tons. In 2008/2009 Sugar production was about 1.7 million tons, only 1.4 percent more than in 2007/08, because attractive cereal prices, especially for wheat, have contained the expansion in beet areas. In 2009/2010 Sugar production in Egypt reached...

Put yourself in the shoes of the Egyptian Government. The country is already suffering from severe...

Put yourself in the shoes of the Egyptian Government. The country is already suffering from severe water shortages. In the future, the number of people needing water is going up drastically and the amount of water available will decrease once the dam in Ethiopia is finished. What actions does the government have available? Come up with three options. Discuss the cost/benefits or pros/cons of each option. Evaluate the options and determine which one would be the best for the people...

Given the current state of the economy, do you believe that the government is intervening too...

Given the current state of the economy, do you believe that the government is intervening too much or not enough? Why?

What is light? You can start by describing the different historic models for light and explain...

What is light? You can start by describing the different historic models for light and explain their individual strength and shortcomings in explaining observable phenomena. Then, try to summarize our current quantum mechanic understanding and highlight its implications for all matter and energy. Finally, consider identifying visible light within the electromagnetic (EM) spectrum and discuss applications that may depend on different light effects such as photoelectric or electro-luminescent effect.

“Egyptian government program to boost consumer spending goes live today.” Enterprise, 26 Jul. 2020. Questions on...

“Egyptian government program to boost consumer spending goes live today.” Enterprise, 26 Jul. 2020. Questions on Article: 1. a) What’s the article talking about? Briefly state the main points in the article. b) How can this program affect our circular flow diagram? How can this benefit the two players in the economy? Explain. c) What is the effect of this program on GDP? Explain. d) In your opinion, why do you think the government initiated this program during the pandemic?

Two cars start from rest at a red stop light. When the light turns green, both...

Two cars start from rest at a red stop light. When the light turns green, both cars accelerate forward. The blue car accelerates uniformly at a rate of 4.7 m/s2 for 3.8 seconds. It then continues at a constant speed for 8.5 seconds, before applying the brakes such that the car’s speed decreases uniformly coming to rest 206.78 meters from where it started. The yellow car accelerates uniformly for the entire distance, finally catching the blue car just as the...

Two cars start from rest at a red stop light. When the light turns green, both...

Two cars start from rest at a red stop light. When the light turns green, both cars accelerate forward. The blue car accelerates uniformly at a rate of 3.4 m/s2 for 4.1 seconds. It then continues at a constant speed for 14.7 seconds, before applying the brakes such that the car’s speed decreases uniformly coming to rest 258.93 meters from where it started. The yellow car accelerates uniformly for the entire distance, finally catching the blue car just as the...

Two cars start from rest at a red stop light. When the light turns green, both...

Two cars start from rest at a red stop light. When the light turns green, both cars accelerate forward. The blue car accelerates uniformly at a rate of 4.7 m/s2 for 3.8 seconds. It then continues at a constant speed for 8.4 seconds, before applying the brakes such that the car’s speed decreases uniformly coming to rest 205 meters from where it started. The yellow car accelerates uniformly for the entire distance, finally catching the blue car just as the...

Subjects