Egypt's Economy Performs Miracles in 2018

By: Taarek Refaat

CAIRO, Dec. 31 (SEE)- Despite the negative global trend, the Egyptian economy has performed "miracles" in the year 2018.

The government has managed to implement a successful reform program, in which Gross Domestic Product (GDP) increased from 4.2 percent in the 2017 fiscal year reaching 5.3 percent in 2018, and unemployment declined to about 9 percent.

The country's account deficit declined to 2.4 percent of GDP in 2017 from 5.6 percent the preceding year, mainly stimulated by strong remittances' transfers and recovery of the tourism sector. Government debt also shrank from 103 percent of GDP in 2017 to 93 percent this year.

The Central Bank of Egypt’s (CBE) cautious monetary policy backed down inflation rates from 33 percent in 2017 to 11.4 percent in 2018.

Nevertheless, inflation rose to 16 percent in the fourth quarter of this year, driven by a hike in energy and vegetable prices. However, the CBE aims to reduce inflation to single digits.

The CBE’s was committed to a flexible exchange rate policy, which helped boost competitiveness, and cushion foreign reserves against external shocks.

Moreover, the banking system in Egypt remains liquid, effective, and adequately capitalized.

CBE's fiscal policy in 2018/19 will aim at achieving a GDP surplus of 2 percent through the reduction of government debt on a quarterly basis.

The government remains further committed to raising revenues from the reform of energy subsidies. Revenues will then be invested in social projects including health, education, and infrastructure.

The Egyptian government has conducted extensive efforts to improve the living standards of the most vulnerable citizens including "Takaful and Karama" Program, which covers more than 10 million inpiduals, "Forsa", for the creation of employment opportunities and "Mastoura" for providing sustainable income generation for women, as well as "Sakan Karim" to afford clean drinking water and sanitation to rural areas.

Furthermore, Egypt will witness an increase in salaries, pensions, and tax incentives through social packages and labor-related benefits.

Meantime, Egypt amended laws to improve access to industrial land, promote competition, improve transparency, fight corruption and facilitate investments, which is crucial for achieving sustainable development.

To develop fiscal transparency, the government has provided public information on budget data throughout the year.

“The team would like to thank the Egyptian authorities, the CBE and the Ministry of Finance, for their openness, candid discussions, and hospitality.” International Monetary Fund (IMF) said in a statement.

The government continues to implement reforms that aim at strengthening the private sector, which creates employment opportunities for Egypt's future generations.