IMF Posts Positive Expectations For Egypt's Economy

By: Yassmine ElSayed

CAIRO, Apr. 7 (SEE) -  The International Monetary Fund (IMF) has just posted positive outlook for the Egyptian econom, expecting it to achieve a growth rate of 5.9% by the end of next fiscal year 2019-2020.

In the fourth review of Egypt's Extended Fund Facility arrangement, IMF said that Egypt's total public debt is projected to continue to shrink to about 74% of the gross domestic product (GDP) by 2022/2023 given the implementation of the economic reform program.

The figure is expected to be driven by the recovery of tourism, construction, expansion in the gas extractives and investment sectors and proceeding with the implementation of strong structural reforms.

"Egypt's inflation rate is expected to range between 13 and 14% by the end of the current fiscal year," the IMF added.

According to the review, monetary policy remains anchored by the medium-term objective of bringing inflation to single digits. The recent pick-up in headline inflation reflected temporary increases in food and energy prices, but a restrictive monetary policy stance has helped to reverse the increase and keep core inflation well anchored.

The authorities have taken important steps to deepen the foreign exchange market and allow greater exchange rate flexibility, including by eliminating the repatriation mechanism.

While the outlook remains favorable, a more difficult external environment poses new challenges as global financial conditions have tightened. Egypt has successfully weathered recent capital outflows, but consistent policy implementation will be essential to further strengthen policy buffers, including by containing inflation, enhancing exchange rate flexibility, and reducing public debt

According to report, the reform of fuel subsidies in Egypt is on track to be completed in the 2018/2019 fiscal year.

The authorities are committed to reaching full cost recovery by the end of 2018/19 for all fuel products, except for LPG and fuel oil used in bakeries and electricity generation".