CAIRO: Egypt’s economy is expected to grow by 2.9 percent during the current FY (2014/15), up from a 2.2 percent growth during the previous FY, the World Bank announced in its recent Global Economic Prospects report.
Meanwhile, the government is targeting 3.2 percent growth rates in its economic development plan for 2014/15, as economy started to recover from dramatic slowdown triggered from political upheaval following the January 25 Revolution.
“Egypt especially benefited from greater stability and large-scale financial support from the GCC for investment programs. As a result, industrial production rebounded sharply and the purchasing managers’ indexes (PMIs) indicated marked improvements in confidence,” the organization said in the report.
According to the report, investors’ interest in Egypt increased as the economy has began to recover, and GCC support helped ease a shortfall of foreign reserves.
The World Bank report noted the government’s decision to apply subsidy reform in 2014, that raised fuel prices by 78 percent, with a plan to double electricity prices over the next five years.
“Egypt has started to reform energy subsidies by raising electricity and fuel prices, which, together with revenue measures, should lower the fiscal deficit from 14 percent of GDP in the fiscal year ending June 2013, to 11 percent of GDP in two years,” it stated.
Remittance flows to Egypt “stabilized” in 2014 after a sharp fall in 2013, said the bank, citing heavy interest in purchasing investment certificates for the expansion of the new Suez Canal which were limited to Egyptian citizens.
Shanta Devarajan, Chief Economist of the World Bank’s Middle East and North Africa Region, told state-owned MENA Wednesday that the Egyptian government “is convinced” that its Economic Summit in March must present a credible plan on development projects to attract investors, rather than to seek funding.
Devarajan underscored the World Bank’s attendance, saying that Egypt should convince investors they would be part of its future development because “tax exemptions are not the ideal means to encourage businessmen.”
Sahar Nasr, the World Bank’s Lead Financial Economist of the MENA Micro, Small and Medium Enterprises section, told MENA Tuesday that the bank plans to fund projects worth $5 billion in Egypt in 2015.
The World Bank’s projects in Egypt aim to house low-income people, support the Principal Bank for Development and Agricultural Credit, and create job opportunities for youth and women through financial and technical support, according to Devarajan and Nasr.