World Economy

IMF Vets Egypt Economy

IMF Vets Egypt EconomyIMF Vets Egypt Economy

The International Monetary Fund has given its first comprehensive assessment of Egypt in five years. It’s a long-awaited health check for Egypt’s economy after a period of deep turmoil.

Egypt’s suffered four years of turmoil. The uprising that toppled Hosni Mubarak and the subsequent upheavals hitting the country hard, putting off investors and tourists – and slashing growth, Reuters reported.

Chris Jarvis, the Fund’s mission chief to Egypt said: “The top economic priority for Egypt is jobs. Egypt needs to support growth and create jobs while at the same time bringing down the budget deficit and maintaining foreign exchange reserves.

“That sounds like a difficult combination but there are policies which will help Egypt achieve all of those things especially subsidies reform and greater exchange rate flexibility. They will create jobs and at the same time support Egypt’s finances.”

Unemployment is running at 13 percent in the Arab world’s most populous country. It has received billions of dollars in aid from Persian Gulf states since ex-army chief Abdel Fattah al-Sisi ousted President Mohamed Mursi of the Muslim Brotherhood in 2013.

That’s kept the economy afloat. Government reforms are seeking out growth while trying to combat inflation. In July, it slashed subsidies that have long weighed on state finances. It sparked a rise in energy prices – but sent a signal the government was ready to take tough decisions.

The IMF thinks Egypt is on course to bring a hefty budget deficit below eight percent of GDP by 2018/19.

Chris further said: “The main risk that I see for Egypt is that the government might not follow through with its plans. If they do follow through consistently, we think the prospects are very good.”

As for growth, the lender’s penciling in a steady rise over the next few years. “Things are looking up in Egypt. We see economic growth approaching four percent this year and we see it as higher still, maybe five percent, in the medium term,” he said.

Egypt may still struggle to create enough jobs for a rapidly growing population. But those growth rates do mark an improvement from the lows hit after its political turmoil began. And should at least be enough to prompt a positive report from the IMF ahead of an international investors’ conference in March.