World Economy

Egypt Targets 5% Growth by Mid-2018

Consumers have been hit by further price hikes.Consumers have been hit by further price hikes.

Egypt targets a 5% economic growth rate in the year to June 2018, the finance ministry said Sunday as the government seeks to revive an economy battered by political turmoil.

Egyptian authorities have battled high unemployment, inflation and a collapse in tourism income since the 2011 uprising that toppled former president Hosni Mubarak, AFP reported.

President Abdel Fattah al-Sisi, who led the 2013 military overthrow of Mohamed Morsi, Egypt’s first elected civilian president, vowed to get the economy back on track after his election the following year.

But consumers have been hit by further price hikes since November when Cairo floated its currency and slashed fuel subsidies as part of an economic reform package linked to a $12-billion International Monetary Fund loan.

The Egyptian pound had been pegged at 8.83 to the dollar, but has since weakened to more than 19 pounds to the dollar.

Egypt’s inflation rate jumped to 19.4% in November from 13.6% the previous month, according to the central bank. Despite its woes, the government has projected a 5.2% GDP growth in the year to June 2017.

Economic output grew 4.3% in the year to June 2016, the ministry of planning said in November.

The finance ministry hopes to bring unemployment—which officially stood at 12.6% from July to September—down to 11% in the year to June 2018.

The ministry said it also wants to cut its budget deficit to 9.5% of GDP in the year to June 2018, down from 12.2% the previous year. It said it hopes to cut public debt to 94% of GDP in the year to June 2018, with a medium-term target of 80%.

“The government will continue to implement a structural reforms package to support productive sectors especially industry and exports, while attracting investments,” the ministry said. It said it would press ahead with implementing a value added tax and “policies to rationalize spending.”

Meanwhile, a string of loans recently secured by the Egyptian government are providing a badly needed fillip for the country’s struggling economy, experts have said.

The government on Thursday signed a $1 billion loan agreement with the World Bank, officially dubbed the Second Consolidation Sustainable Energy and Competitiveness Programmatic Development Policy Financing in Egypt.

“This loan represents a new testimony of confidence in the Egyptian economy and its reforms,” Mohssen Fadl, a banking expert said.

Last month, the IMF endorsed a $12 billion program to Egypt, which has already received $2.75 billion from the lender, marking the first installment of the bailout loan.

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