UK think tank: Egypt’s economic reforms ‘surpassed expectations’

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Capital Economics said the efforts of President Abdul Fattah Al-Sisi to rejuvenate the Egyptian economy had “surpassed many expectations” and that reforms taken so far “should ease some of the economy’s near-term vulnerabilities”, reported the Financial Times on Wednesday.

After 100 days in power, Al-Sisi has been given a “cautious thumbs up by economists”, the Financial Time reported.

The report cited significant cuts to subsidies, which account for one third of state spending, as one of the main reasons towards an economic boost. In July, the Egyptian government announced a raft of energy price hikes, which Capital Economics estimates will trim the budget deficit by 2.5 percent of GDP.

Furthermore, Egypt has started gradually repaying its large debts to foreign energy companies, which is significant to foreign investment. These moves, Capital said, should lead to better operating conditions for foreign energy firms in Egypt, in turn boosting investment and output.

The Financial Times additionally cited EFG Hermes as also hailing the Egyptian government’s achievements. Since July, a number of economic indicators – from a recovery in car sales to capital inflows – had shown “positive trends”, though “improved sentiment remains fragile, in our view, pending improvement in economic fundamentals”, EFG Hermes said.

Meanwhile, Egypt has raised LE61 billion towards completing the Suez Canal expansion and expects to increase revenues from $5.3 billion USD last year to $13.5 billion USD by 2023.