Masood Ahmed, director of the International Monetary Fund Middle East and Central Asia Department, said Egypt has achieved greater stability and confidence in its economy, where it has made ??great efforts over 2014/2015 to reduce the balance of payments deficit.
Ahmed expressed his approval of the Central Bank of Egypt move to introduce more flexibility in the Egyptian pound’s exchange rate, Yahoo reported.
Ahmed said that the growth forecast for Egypt this year ranges between 3-3.5%, down from 4.2% last year, which is mainly due to the decline in tourism revenues after the Russian plane crash, as well as the foreign currency crisis.
Making the market more flexible is more effective than a fair US dollar price, Ahmed told Daily News Egypt, adding that the first would reflect the real rate of the pound through supply and demand operations. Major national projects can help accelerate growth and create jobs, he said.
Egypt did not make a formal request to the IMF for a loan, said Ahmed, pointing out that the support provided to Egypt now is limited to technical assistance. He added financing from the Persian Gulf countries proved to be sufficient to help Egypt in the last period.
He named the main challenges facing Egypt as the high budget deficit, providing job opportunities, and creating a suitable environment for investment. He, however, said the country is moving in the right direction.
Economic reforms must be continued, regardless of the funding source, he said, explaining that Egypt requires $12 billion per year. He called for a better business environment to welcome private investment, in light of the limited work provided through the public sector. “Egypt’s access to financing from the fund will be a catalyst to get funds from other sources,” Ahmed said.
He called upon the government to angle public spending towards infrastructure, so as to create opportunities for growth and jobs.
Egypt should take efforts to restore its own economy by liberalizing the country’s famously inefficient red tape and government regulation of business, which also allows far too many opportunities for corruption.
To date the Egyptian government has been slow to introduce major structural reforms, and it is banking on the hope that the pursuit of mega-projects will trigger an economic lift for the country, leading to a trickle-down of wealth.
