Egypt’s economy is on a recovery path after four years of slow activity, this is according to the International Monetary Fund (IMF).
The group added that there was a growing national consensus on the need for economic reform, CNBC reported Wednesday. “Egypt faces many challenges. During the prolonged political transition, growth fell and unemployment and poverty increased to high levels. Budget deficits grew and external pressures led to a fall in foreign exchange reserves,” read the group’s statement. “The authorities recognize these challenges and have set appropriate economic objectives, including raising growth and steadily reducing inflation.” The IMF said the government was seeking to reduce the budget deficit to 8–8½ percent of GDP and the budget sector debt to 80–85 percent of GDP by 2018/19.
According to the group, the government of Egypt intends to increase spending on health, education, and research and development as mandated by the constitution, as well as on infrastructure.
Structural reforms planned by the authorities focused on improving the business climate, promoting investments and financial sector development, while addressing poverty and social gaps. The authorities are also seeking to improve Egypt’s external position, though additional external financing will still be needed through the medium term.
“The authorities have already begun to take the action needed to achieve their objectives. They have begun bold subsidy and tax reforms, are pursuing a disciplined monetary policy, expanding social policies, and have initiated wide-ranging regulatory and administrative reform efforts to improve the business environment and boost investment,” added the IMF.
“Policies implemented so far, along with a return of confidence, are starting to produce a turnaround in economic activity and investment. We now project that growth will reach 3.8 per cent in FY 2014/15.”
According to the group, the country saw headline inflation rising to 11.8 percent in October.
