The International Monetary Fund said that the Egyptian economy is beginning to recover and recent structural reforms are creating an improved business climate.
Following a visit to Cairo from an IMF mission, lead member Chris Jarvis reported: “This is a moment of opportunity for Egypt. The economy has begun to recover after four years of slow activity.”
The delegation commented positively on Al-Sisi’s attempts to reduce the budget deficit, which stood at 12.8 percent of GDP during the previous fiscal year. The president has undertaken a programme of cutting state subsidies on fuel, leading to a 78 percent rise in price.
However, during the current financial year there has been a 26.5 percent increase in public spending on healthcare and a 13 percent increase in education spending.
According to the IMF’s forecast the economy will grow 3.8 percent in fiscal year ending 30 June, representing an increase from 2.2 percent in the previous fiscal year.
Egypt’s economy has suffered during recent years of political upheaval, during which time growth fell while unemployment and poverty increased significantly.
After the January 2011 uprising Egypt had sought to acquire a $4.8 billion loan from the IMF, however negotiations never produced the capital. Instead, following President Morsi’s ouster in 2013 Gulf nations gave Egypt $10.6 billion aid in cash and oil products.
The government has stated that it will alter regulation to make investing in Egypt an easier process, though what policies are to be changed remain to be seen.
The positive news echoes recent statements by international credit rating agencies Moody’s who changed Egypt’s outlook rating from ‘negative’ to ‘stable’ in October, following a similar move by Standard and Poor’s in May.
Furthermore, HSBC’s latest Purchasing Managers’ Index reported an expansion in the manufacturing sector in September, at a rate the highest in ten months. There has been upturn in the non-oil private sector as measured by increased output, orders given to businesses, and for the first time in nearly two and a half years there has been an increase in staffing levels through the employment of additional workers.