Egypt Economic Monitor, July 2019 : From Floating to Thriving – Taking Egypt's Exports to New Levels
Confronted with pervasive macroeconomic imbalances and microeconomic distortions, the Government of Egypt (GOE) started in 2016 to move forward with important reforms to stabilize the economy and restore confidence. At that time, Egypt was facing d...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/260061563202299626/Egypt-Economic-Monitor-From-Floating-to-Thriving-Taking-Egypts-Exports-to-New-Levels http://hdl.handle.net/10986/32109 |
| Summary: | Confronted with pervasive macroeconomic
imbalances and microeconomic distortions, the Government of
Egypt (GOE) started in 2016 to move forward with important
reforms to stabilize the economy and restore confidence. At
that time, Egypt was facing daunting economic and structural
challenges, unsustainable fiscal and external imbalance and
a deterring business environment. The severe foreign
currency crunch that peaked in late 2016 motivated the GOE
to introduce transformative economic reforms to alleviate
the longstanding structural constraints to inclusive growth
and macroeconomic stability. The flagship reforms of the
economic program were (i) the liberalization of the exchange
rate to eliminate the large currency overvaluation and
foreign exchange shortages; (ii) a fiscal consolidation
program that introduced a ale-added tax (VAT) and a gradual
reduction in energy subsidies and the wage bill, and (iii)
major energy sector terms to address power outages by public
and private investment in generation and establish
Egypt's potential as an oil and gas producer by
reducing pricing distortions and arrears. These reforms were
complemented by efforts to improve the business climate and
attract private investment, starting with legislative
reforms and the introduction of new laws on industrial
licensing, investment, and insolvency. Macroeconomic
indicators have reacted positively to the stabilization
reforms. Most notable, economic growth has accelerated, the
parallel market for foreign currency exchange has been
contained, external deficits have narrowed, and
international reserves have replenished. Public finances are
progressing on a more sustainable path, with a frim
containment of spending on price subsidies and a narrowing
fiscal deficit. The improvement in macroeconomic conditions
have also reflected positively on investors; perceptions,
with credit rating agencies upgrading their ratings and
outlook for Egypt. |
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