IMF Raises Egypt's Growth Forecast to 2.8% during FY 2020/21

The International Monetary Fund (IMF) raised its forecast for the growth of the Egyptian economy to 2.8% during the fiscal year 2020/21.

The fund said it had revised the baseline forecast upwards to reflect a more moderate contraction than expected in the FY 2019/20, according to the first review report on the credit preparedness agreement.

The IMF added that real GDP growth is now expected to reach 2.8% in the FY 2020/21, compared to 2% in the approval of the agreement, with a modest recovery in all sectors except tourism, where precautionary measures have been eased, expecting growth to reach 5% in the medium term.

The IMF expects that the average inflation to slow to about 5% in the same period, stressing the need for it to stabilize at about 7% in the medium term as economic activity returns to normal.

The fund indicated that the actual interest rates on the government debt are expected to decrease, reflecting the decline in inflation, pointing out that Egypt's debts are assessed as being sustainable, exposed to risks.

The fund said that despite the sharp downward trend since the 2016/17 fiscal year, the debt-to-GDP ratio is still above the benchmark of 70% of GDP for emerging markets.