Washington, DC- The economic indicators in Egypt have largely improved in the last two years, the Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF), Jihad Azour, said on Friday.
The programme, which that was set by the government, was supported by the IMF, and it contributed in improving economic stability in Egypt.
Azour noted that Egypt’s growth has increased in the last two years to 5.5%, and the inflation rate decreased to 11%, compared to 30% in 2017.
Additionally, unemployment moved from 12% to 9% and other economic indicators, such as improved exports and tourism, have been improving as well.
“We have reached the first phase of economic stability which is of essence for the structural reforms. We need to allow for growth to create jobs for youth who enter the market that are estimated at 700,000 to 1 million every year, which will allow the economy to adapt with international changes to provide a bigger role for the private sector. Furthermore, it will allow for the improvement of the level of social protection which was an important part of the first programme,” Azour indicated.
He pointed out that subsidy system in Egypt is now presented for specific social classes.
“As for the last phase of the IMF’s Extended Fund Facility (EFF) to Egypt, the programme is about to be completed and we still have one last review which should be in June. Moreover, Egyptian officials said that they are committed to the reforms, and we expect to have detailed discussions by the mission in June and the programme ends in November,” he elaborated.
Moreover, he disclosed that the IMF is willing to cooperate with the government at any level.
The programme so far was very well-implemented, and the IMF hopes that the discussions and the review will keep persisting as before, according to Azour.
In his reply on Daily News Egypt’s questions, Azour said that the next review will not include any requests or issues related to taxation. However, the main objective of this review is to strengthen some of the structural reforms that will help the economy to grow faster and to be led by the private sector.
“As it was in fact published in the last review document on how to improve the business environment, passing the law on public procurement in order to allow additional transparency on the process of procurement and to attract additional FDIs,” he noted.
“Therefore, in the next review, it is going to be more on those issues as well as also anchoring the macrocosmic stability with the next budget with an objective of achieving a level of primarily surplus, the balance between government revenues and government expenditures outside the debt serves to a surplus of 2%, which will help Egypt achieve in the medium term a debt trend that will help lower the debt, which is one of the main objectives of the programme,” Azour declared.
There are more issues to be targeted toward growth through improving a certain number of legislations, addressing some of the issues related to social protection, and maintaining the consistent trend since the last two years in terms of deficit and debt on a downward direction.
He explained that the reform track is a long track. The first phase is to let Egyptians feel stability and reduce the economic risks particularly in terms of the imbalance in the fiscal and external balances which significantly impacted Egypt’s trade and this has already been achieved.
He went on to say that the second phase is the financial stability with growth in reserves which will allow the Egyptian economy to attract billions of investments through the part of the investments which went to fiscal or securities but we have seen a direct investment rise and we hope that the rise in direct investment will further enhance more job creating.
“In my last meeting with a group of officials in February in Egypt, I noticed how much social development programmes provided more protection, particularly for women in rural areas, as 70% of beneficiaries are women who were not skilled, were illiterate. These programmes provided a minimum level of dignity for the people and continuing these programmes is important, and the people will feel that reforming part of the subsidy regime is now paying off,” he added.
“I think there is a need for focusing on the middle class in Egypt and the private sector is the main engine of growth now because of its dynamism and because the public sector cannot handle greater numbers of youth,” Azour highlighted.
Strengthening investments in the economic infrastructure, the digital economy, lends a greater sense that stability in the economy will continue into the next phase, which is very important, Azour said.
He told Daily News Egypt that Egypt should focus, in the coming period, on non-petroleum sectors to attract FDIs, and it needs patience as reforms do not happen in one go.