IMF Maintains Egypt's Growth Forecast at 5.9% in 2020

The International Monetary Fund (IMF) maintained high economic growth forecasts for Egypt's current fiscal year 2019-20, lowering its inflation forecast for the same year, supported by improved macroeconomic indicators and investor sentiment, as well as tourism and natural gas recovery.

According to the fifth performance report on the Egyptian economy, issued on Friday, the IMF predicted that the Egyptian economy will achieve a growth rate of 5.9 percent during the current fiscal year, and reduced its estimates of inflation rate from 10.7 % in the previous forecast to 9.6 percent, and will continue to decline to 7.4 % in 2020-21.

The IMF predicted that the Egyptian economy would grow by 6 percent over the medium term, adding that the public debt would shrink to 70 % of GDP by 2024.

The fund pointed to a rebound in financial market indicators in 2019 despite the continued risks to the global outlook due to escalating trade tensions and increased investment portfolio flows in 2019, which supported the Egyptian pound against the US dollar by about 8 percent since the beginning of the year.

The IMF said the performance of the Egyptian economy has improved significantly since the reform program began in 2016.

"The national economic reform program implemented by Egypt over the past three years has succeeded in enhancing the stability of macroeconomic indicators, as well as raising growth rates and reducing unemployment. Measures implemented placed public debt rates on a clear downward path" IMF noted, adding that the economy remained strong in the fiscal year 2018-19.

The Fund stressed that the outlook remains favorable, stressing the importance of completing the path of sustainable development to maintain strong growth in the medium term.

It is noteworthy that a delegation from the IMF visited Egypt last May to conduct the fifth and final review of the economic reform program.

The IMF team and the Egyptian authorities reached an agreement allowing the disbursement of the sixth tranche of US $ 2 billion, which came on July 24, as part of the three-year Extended Fund Facility (EFF) program with the financing of $12 billion to Egypt.

Moreover, Moody’s financial services company said Egypt‘s GDP growth is expected to reach 5.6% in 2019 and 5.8% in 2020, supported by the Central Bank of Egypt’s (CBE) decision to cut interest rate and inflation rate.