São Paulo – Egypt’s economy is recovering and starting to grow again, but measures are still needed to create jobs, reduce the domestic public debt and the fiscal deficit. So said the International Monetary Fund (IMF) this Thursday (17th), following a series of meetings between its staff and local authorities in Cairo between Sunday (13th) and today.
In a press release, IMF mission chief Chris Jarvis said Egypt’s Gross Domestic Product (GDP) is poised to grow 4.2% between 2014 and 2015 and inflation has declined. The banking sector keeps getting stronger and the budget deficit is being reduced due to measures such as higher tax collection, wage bill containment and lower fuel and energy subsidies.
Jarvis also noted that the inauguration of the new Suez Canal, which runs parallel to the older one, and a recent major gas find mean the medium-term outlook for the country is a good one. The new Suez Canal was built in a single year and inaugurated last August. It connects the Mediterranean and Red seas and will enable more ships to sail across, thus increasing revenues for the country.
These achievements notwithstanding, Egypt faces challenges to stronger, more sustained growth. The Central Bank, the IMF said, has started taking action to curb the parallel exchange market, which could impact positively on tourism, foreign direct investment and exports. The country must also create jobs and reduce its fiscal deficit.
“Unemployment remains high notably among the youth. The fiscal deficit is still large and domestic public debt high. Reserves are about three months of imports, and foreign exchange is in short supply. The authorities recognize that the recent positive developments need to be secured through strong policies, and intend to continue a much-needed fiscal consolidation while preserving growth-friendly investment,” Jarvis said in the press release.
*Translated by Gabriel Pomerancblum
