(Qualitative shift against the Coronas pandemic repercussions)
The Egyptian government began implementing a large-scale ambitious program of economic reform in fiscal year 2019 - 2020 as a result of the national economy's imbalances over the past seven years.
The overall objectives of the program included reducing the state's general budget deficit, reducing the balance of payments deficit, activating the competitiveness of the Egyptian economy, in addition to reducing the inflation rate and working toward more sustainable economic growth.
To achieve these objectives, the Government has introduced a number of structural reform policies and has taken various financial measures aimed at raising revenue and improving the efficiency of the current expenditure structure, furthermore the government has accordingly applied the value-added tax as part of a reform program aimed at increasing tax revenues sustainably.
Also, the government has taken steps to reform the structure of public expenditure, taking bold steps to reduce energy subsidies, which mostly benefit the rich, and which have led to a drift in production into energy-intensive industries, then it has reallocated part of these resources to social spending, such as health, education, and targeted cash transfers.
Thanks to a record of economic and structural reforms that have made the Egyptian economy more resilient and economically resilient to the outbreak of the Corona virus pandemic, Egypt’s good credit rating has been stabilized.
Egypt's economic reforms, which consisted of strong foreign exchange reserves, a large-scale domestic financing base and imports sufficient to cover foreign debt payments, all contributed to creating a buffer zone to avoid the Egyptian economy the capital outflow storm that swept other emerging markets in the wake of the outbreak of the Corona virus pandemic.
In addition, Egypt's economic power stems from its increased competitiveness, supported by the improved performance of the local currency following the decision to liberalize the exchange rate in 2016 and develop a back-gas field that has contributed to boosting investment activity in energy and other sectors.
Moody's credit institution awarded "BA" degree in its assessment to the effectiveness of Egypt's fiscal policy that is to reverse the structural shift toward primary government surpluses starting this year, and the trend toward a 1%-of-GDP surplus for the next few years, although it will now be under short-term pressure because of the outbreak of Corona virus.
Moody's also awarded the "BA" score; to the efficiency of Egypt's macroeconomic and monetary policies has been a major reversal of the central bank's efforts to maintain a relatively stable price level since it decided to liberalize the pound's exchange rate against the dollar in 2016 until July last year; Inflation rates will then record consecutive record returns consistent with the bank's target range.
The Egyptian economy is expected to grow by 5.4% by the end of this year., as a result of economic reform measures implemented by the Egyptian government, which have resulted in high growth rates, are a major reason for the economy's strength in the face of the consequences of the outbreak of the new Coronavirus, which has reduced risks to the economy and to different social classes.
The country's high economic growth has also reduced unemployment to 8% in the last quarter of 2019, near its lowest level in decades, and has strengthened Egypt's ability to absorb the shock caused by the Corona outbreak.
Egypt ranks second on the list of countries less affected by the US-China trade war as its exports to both countries are not effective, and the analysis also relied on improved credit rating, accumulation of international reserves, and real return prices.
Egypt can run without IMF support, as a guide to its negotiating a non-financing program, the reason that the strong cover of foreign exchange reserves covers 9 months of imports.
This boosted investor confidence and reflected on the 10-year Treasury bond interest, which shrank by about 2%, accelerating growth to reach 5.4% this year, but less than the Treasury's 6% target.
Capital Economicus expected interest rate reductions of 72 during next August meeting, and the effect of the increase in fuel subsidies on the overall inflation rate is limited, and the pressure on core inflation will remain under control.
The outlook for Egypt's economy, for the majority of the international donor experts and institutions, with the International Monetary Fund at the forefront, seems good and encouraging;Based on the overall indicators, notably currency stability, improved Suez Canal yield, the start of exploitation of new gas fields and the recovery of tourism in the past period before the Koruna pandemic. However, this improvement, while of great importance, does not fully resolve the economic crisis in which Egypt suffers in the most prominent areas of unemployment, low incomes, and high prices.
So, what is needed economically?
The main focus on large-scale energy projects continues.
Creating equality of opportunity among producers, improving conditions of competition in the market in a way that helps to improve the income level, and providing goods of good quality and at appropriate prices.
To promote technological development and to continue to be incorporated into the productive and institutional process.
Rely on the high-level distinct competencies in economic intellectual giving; To formulate economic policies that are appropriate to international variables after the Corona pandemic.
Maintaining economic fundamentals as a safety valve for any possible changes in the global economy.
Maintain a flexible economic policy in performance, especially fiscal and monetary policy.
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