IMF, WB, OBG fore­cast pos­i­tive re­sults for Egypt’s econ­omy


The Daily News Egypt - - Front Page - By El-Hus­seiny Has­san, Ha­gar Om­ran, and Shaimaa Al-Aees

The In­ter­na­tional Mone­tary Fund (IMF) raised its fore­cast for the growth of the Egyp­tian econ­omy dur­ing the cur­rent fis­cal year to 5.2%, up from 4.8%.

The IMF, in its World Eco­nomic Out­look re­port, main­tained a 5.5% growth pro­jected for Egypt in the com­ing fis­cal year.

The IMF’s pro­jec­tions are con­sis­tent with govern­ment tar­gets for the cur­rent fis­cal year at 5.2%, but are less op­ti­mistic about the next fis­cal year, for which the govern­ment tar­gets 5.8% growth.

The re­port showed that the av­er­age in­fla­tion ex­pec­ta­tions could slightly im­prove in the cur­rent fis­cal year to 20.1%, and 13% next year, com­pared to the 21% and 13.7% re­spec­tively stated in the sec­ond re­view fore­cast pub­lished in Jan­uary.

The IMF also raised its ex­pec­ta­tions for the cur­rent ac­count deficit to 4.4% this year and 3.9% next year, re­plac­ing its pre­vi­ous es­ti­mates at 4.5% and 4%.

Mean­while, the re­port pre­dicted an im­prove­ment in the un­em­ploy­ment rate this year, pro­ject­ing 11.1% on av­er­age this year and 9.7% next year, com­pared to 11.2% and 9.9% in the pre­vi­ous re­port dur­ing the sec­ond re­view for the eco­nomic re­form pro­gramme.

Ac­cord­ing to the fi­nan­cial state­ment for the next fis­cal year bud­get, is­sued days ago by the Min­istry of Fi­nance, the govern­ment ex­pects the av­er­age un­em­ploy­ment rate to reach 10.8% in the cur­rent fis­cal year and 1011% in the com­ing year.

Over the last 15 months, Egypt has been im­ple­ment­ing an eco­nomic re­form pro­gramme in co­op­er­a­tion with the IMF. This pro­gramme in­cluded the floata­tion of the na­tional cur­rency, slash­ing en­ergy sub­si­dies, re­form­ing the tax­a­tion sys­tem, and, in re­turn, lend­ing Egypt $12bn over three years. Egypt has since ob­tained half the loan.

The IMF mis­sion is due to visit Cairo next month for the third re­view of the eco­nomic re­form pro­gramme, un­der which Egypt will re­ceive a tranche of about $2bn.

The World Bank (WB), in a Mon­day state­ment, ex­pected that the bud­get deficit will nar­row to 9.8% of GDP in FY 2017/18,adding, “this is slightly higher than ini­tially-bud­geted, due to larger in­ter­est pay­ments, higher in­ter­na­tional oil prices, and larger-than-bud­geted ex­change rates.”

The WB said that the fis­cal con­sol­i­da­tion pro­gramme is ex­pected to rely on rev­enue mo­bil­i­sa­tion, in par­tic­u­lar on the in­crease in VAT re­ceipts, in ad­di­tion to en­ergy sub­sidy re­forms.

“The cur­rent ac­count deficit is ex­pected to nar­row to 4.9% of GDP in FY 2017/18, from 6.6% of GDP in FY 2016/17,” the state­ment added.

The WB noted that im­prove­ments in oilimport­ing coun­tries is also ex­pected to be driven by a sharp re­bound in Egypt. Sta­bil­i­sa­tion poli­cies, re­forms, and a surge in for­eign re­ceipts are ex­pected to lower fis­cal and ex­ter­nal im­bal­ances in 2018 and be­yond.

“In the short term, the out­look for MENA re­mains pos­i­tive, and the growth re­bound is ex­pected to hold firm over the next two years, reach­ing 3.3% in 2019 and 3.2% in 2020,” said the WB.

Egypt is num­ber one in terms of GDP growth in the Mid­dle East com­pared to the GCC coun­tries, as the growth rate of the Egyp­tian pound ranges be­tween 1% and 2%, ac­cord­ing to Oum­nia Boualam, coun­try di­rec­tor at Oxford Busi­ness Group.

Boualam said that Egypt is the cen­tre of growth as the coun­try is more com­pet­i­tive and at­trac­tive for more in­vest­ments.

The year 2017 was the best year for many com­pa­nies in the sec­tors of in­fra­struc­ture, real es­tate, and bank­ing,

Boualam said, ex­plain­ing that the year wit­nessed an in­fra­struc­ture boom in build­ing ma­te­ri­als and sup­pli­ers as well as other sec­tors.

“I ex­pect more growth in GDP, as Egypt, at the be­gin­ning of 2017, was ex­pected to achieve 4.5% GDP growth but by the end of the year, the coun­try had achieved over 5% GDP growth, which clearly shows that the for­eign di­rect in­vest­ments (FDIs) have in­creased. Fur­ther­more, if you look at par­tic­u­lar sec­tors you will see a lot of FDIs in the in­dus­try sec­tor, es­pe­cially multi­na­tional com­pa­nies look­ing for in­vest­ment in Egypt,” Boualam.

Boualam noted that in the first quar­ter of 2017,the Egyp­tian peo­ple were still ab­sorb­ing the shock of lib­er­al­is­ing the ex­change rate. How­ever,peo­ple be­came more con­fi­dent and com­pa­nies made more in­vest­ments in the last six months of 2017.

Newspapers in English

Newspapers from Egypt

© PressReader. All rights reserved.