The IMF has lauded Egypt’s implementation of economic reforms that helped it secure a $12 billion aid package, predicting the country's GDP growth could rise to 6 per cent per annum "in the medium term" if the country stays the course.
Egypt’s economy grew 4.2 per cent in the 2016/2017 fiscal year that ended in June, beating the IMF forecast of 3.5 per cent, and is set to expand at a rate of 4.8 per cent in the 2017-2018 fiscal year, the fund said in its newly-published Egypt Country Report. The country's economy grew 3.5 per cent in the 2015-2016 fiscal year.
“Growth is expected to gain momentum in 2017/18, driven by a recovery in consumption and private investment and a continued positive contribution from net exports,” the fund said.
Medium-term growth is forecast to rise to 6 per cent in the medium term, the fund said, giving no further details.
Egypt’s economy is rebounding following a period of political and economic turmoil since the 2011 uprising. The country has endured severe hard currency shortages as foreign investment and tourism revenues dwindled, resulting in lower growth and a widening fiscal deficit.
Egypt floated its currency in November 2016 and raised fuel prices to boost revenues, in line with expectations set out by the IMF for the three-year $12bn loan facility.
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Read more:
Egypt optimism grow as Cairo ups economic outlook
Egypt inflation falls sharply as currency devaluation impact eases
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The loan has helped Egypt attract foreign investment and replenish its central bank reserves, which reached $37.02bn in December last year compared with $24.26bn a year previous.
“To sustain economic reform momentum, in the medium term, policy priorities should aim to raise potential output and promote inclusive growth to create jobs for Egypt’s young and growing population,” the fund said.
“This will require the private sector to become the primary engine of growth and the state to provide a stable macroeconomic environment, a friendly business climate and efficient delivery of public goods.”
Egypt suffered from a spike in inflation following the floating of the pound and the rise in fuel prices, with urban inflation hitting a multi-decade high of 35 per cent in July. But the fund expects the measure, which eased to 21.9 per cent in December, to continue falling to 12 per cent by June and reaching single digits by 2019.
The IMF predicts Egypt’s primary fiscal deficit to swing to a surplus of 0.2 per cent of GDP in the 2017-2018 fiscal year. The deficit for 2016-2017 narrowed to 1.8 per cent of GDP from 3.5 per cent of GDP in the previous fiscal year.
The fund urged the government to continue to reduce its overall deficit by further increasing fuel prices and controlling public sector wages.
The IMF urged Egypt to stay the course in its reform programme in order for progress to be sustained.
“Pressures to expand spending beyond budgetary allocations, any premature easing of monetary policy before inflation expectations are fully anchored, or opposition to reforms by vested interests, could undermine stabilisation efforts,” the fund said.
“Loss of momentum on structural reforms would adversely affect growth prospects. External risks relate to a worsening of the security situation that could slow the recovery of tourism, a sustained rise of global oil prices, lower growth in Egypt’s main trading partners, or any unexpected tightening of global financial conditions.”
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ABU DHABI ORDER OF PLAY
Starting at 10am:
Daria Kasatkina v Qiang Wang
Veronika Kudermetova v Annet Kontaveit (10)
Maria Sakkari (9) v Anastasia Potapova
Anastasia Pavlyuchenkova v Ons Jabeur (15)
Donna Vekic (16) v Bernarda Pera
Ekaterina Alexandrova v Zarina Diyas
KEY DEVELOPMENTS IN MARITIME DISPUTE
2000: Israel withdraws from Lebanon after nearly 30 years without an officially demarcated border. The UN establishes the Blue Line to act as the frontier.
2007: Lebanon and Cyprus define their respective exclusive economic zones to facilitate oil and gas exploration. Israel uses this to define its EEZ with Cyprus
2011: Lebanon disputes Israeli-proposed line and submits documents to UN showing different EEZ. Cyprus offers to mediate without much progress.
2018: Lebanon signs first offshore oil and gas licencing deal with consortium of France’s Total, Italy’s Eni and Russia’s Novatek.
2018-2019: US seeks to mediate between Israel and Lebanon to prevent clashes over oil and gas resources.
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
In Full Flight: A Story of Africa and Atonement
John Heminway, Knopff
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A MINECRAFT MOVIE
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Killing of Qassem Suleimani
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
