Structural reforms lead Egyptian economy towards inclusive and sustainable growth...

 

 

• Improvement of indicators enable the government to expand the developmental economic policies.
• The government is proceeding with Social Protection Programs’ Support till all citizens realize reform effects.
• Egyptian countryside development project is a model for developmental partnership with the private sector.
• The government is strongly carrying out digital transformation projects and strengthening financial inclusion.

 

International Monetary Fund (IMF) States:

• Egyptian economy shows strong performance, resilience and ability to absorb shocks in past year.
• Egypt succeeded in maintaining economic stability and policies’ balance amid the pandemic, in protecting social and health spending and in implementing major structural reforms.
• Egypt managed to achieve anew a primary surplus of 2% and to register a downward trend in debt in FY 2022/2023.
• Egypt records a growth rate of 2.8% in current FY, to be scaled up to 5.2% in the coming FY.
• IMF strongly praised Egypt's performance, implementation and commitment to achieve the economic program objectives.
• IMF praised directing greater investments towards infrastructure projects, health and education sectors in the next FY
• IMF praised achieved progress in reforms related to public financial transparency, governance, social protection and improvement of business environment.

 

Vice Minister for Fiscal Policies points out:

• Consultation results with IMF’s experts are positively reflected in investment environment.

 

Minister of Finance, Dr. Mohamed Maait, asserted that the achieved economic gains have pushed the government forward in carrying out structural reforms, without any additional burdens on citizens. Thanks to the said reforms, the Egyptian economy will be directed towards inclusive and sustainable growth, thereby contributing to its resilience and maximizing its ability to absorb internal and external shocks.

 

The improved indicators confirm the stability of economic performance in response to the repercussions of “COVID-19” pandemic. This improvement is also considered as a catalyst for expanding the developmental economic policies and for strongly going on implementing digital transformation projects and promoting financial inclusion as well; in order to boost spending on raising citizens’ standard of living and to improve public-service quality, the minister also pointed out.

 

Following conclusion of the second review of Egyptian economy performance in the context of the 12-month US $ 5.2 billion Stand-by Arrangement, the minister added that the development projects contribute to raising job-rich growth rates, and to laying foundations of inclusive and sustainable development in all different sectors, in such a manner that helps to change the face of life in Egypt and to improve economic performance efficiency.

 

Furthermore, a developmental partnership model with the private sector, concerning the Egyptian countryside development, is established. This model is the largest project in the world in terms of size and diversity of businesses, and the ratio of target people that exceeds half of Egypt’s population; let alone its overarching expanded goals that include the development, service, and social dimensions, the minister clarified.

 

The above-mentioned demonstrates the government efforts to create more room for the private sector as a locomotive for economic growth, hence stimulating it to work in a competitive environment and encourage exports, in consistency with the government’s efforts to reach EGP 100 billion export rate, and to continue supporting social protection programs; so that citizens can see the fruits of economic and social reforms.

 

Amid “COVID-19” pandemic, the Egyptian economy performance is still commended by the international institutions, especially by IMF, thanks to the better than expected economic indicators. Once again, this was shown in the IMF’s last report, following the conclusion of the second review meetings on the Egyptian economy performance. As a result, Egypt’s investment climate will be positively affected, particularly international and domestic financial and business communities and circles. In addition, it will contribute to attracting more investments in the fields of infrastructure, health, and education, to creating new job opportunities, as well as to sustaining higher growth rates for domestic product, to reducing debt and deficit ratios, to maximizing productive capacities, and to expanding export base, the minister referred.

 

The Minister said that the historical economic reforms, the stability and coordination of fiscal and monetary policies, the structural reforms undertaken by the government, as well as the balanced fiscal policies strongly backed by President Abdel Fattah Al- Sisi all helped to give resilience to the Egyptian economy in dealing with Corona crisis, and contributed to reducing repercussions of the “pandemic”, specifically  for the most affected sectors and groups, through the economic activity’s support package of 2% of GDP. In addition, he noted, despite corona crisis, the government achieved a positive growth and primary surplus, and succeeded in reducing total deficit. Basic commodity shortage expanding has never been felt by citizens; while in other emerging countries and other countries, debt and deficit rates have been doubled, and their growth rate has been negative.

 

Additionally, the minister stated, in FY 2020/2021, and despite COVID-19 repercussions, the Egyptian economy growth rate was expected to record 2.8% by IMF experts, rise to 5.2% over the next fiscal year, after it recorded 3.6 % growth rate in last FY. He also indicated that the consultation results held by IMF mission on the Egyptian economy performance, via video conference, confirmed that the Egyptian economy recovered, beyond previous expectations of IMF experts, from “the pandemic” impacts. Thus, upon approval of the IMF’s Boards of Governors on this review results, an additional fund of about US $ 1.6 billion will be made available to Egypt.

 

Thanks to the success of the first phase of the comprehensive Economic Reform Program, the National Structural Reform Program (NSRP) was launched. This highlights the government’s commitment to support human capital development and to have more efficient and transparent public institutions, as well more green economy over the coming period.  In its final review, IMF mission expects Egypt to resume achieving a primary surplus of 2% of GDP starting in FY 2022/2023. This also will help in boosting the economy, reducing public debt and supporting fiscal sustainability, in a way that reflects the strong economic recovery, the minister pointed out.

 

According to the IMF report, Egypt’s fiscal policy in FY2021/22 appropriately targets a gradual financial control to balance needed support for the economic recovery while safeguarding fiscal sustainability. Moreover, making more investments in infrastructure, health, and education projects in the next FY is also praised by IMF experts, as explained by the minister.

 

Over the past 12 months, the strong performance of the Egyptian economy was praised by IMF and shown its resilience and ability to absorb shocks thanks to implementation and commitment to achieve the economic program’s objectives. This reflects maintaining macroeconomic stability and balance of policies during the pandemic, while protecting social and health spending and implementing key structural reforms. Moreover, IMF praised reform advances made as related to public fiscal transparency, governance, and social protection, and improvement made in business environment, explained by the Minister.

 

Vice Minister for Fiscal policies, Mr. Ahmed Kouchouk, said that the positive assessment for Egypt’s economic conditions, during IMF experts’ visit, has been done after their study of all the economic and financial indicators, precisely identifying all reforms and policies followed by Egypt. IMF experts held meetings, via video conference technology, with the following: The Central Bank of Egypt, the Ministry of Finance, the Ministry of Planning and Economic Development, the Ministry of Health and Population, the Ministry of Public Business Sector, the Ministry of International Cooperation, and the Ministry of Environment. Furthermore, an interview with representatives of the international institutions in Egypt, Banks, financial sector, and private sector was also made.

 

Finally, Egypt’s investment climate was positively affected by the consultation results of Egypt with IMF experts, added Mr. Kouchouk. IMF experts highlighted that the government’s fiscal policy in FY 2020/2021 properly focused on supporting health issues of urgent priorities, protecting the most vulnerable, and assisting pandemic-affected sectors. The commitment to implement balanced economic reforms helped to sustain the strong performance of the Egyptian economy, and to achieve all objectives and indicators of reform program included in the agreement with IMF, Mr. Kouchouh indicated.