CAIRO: The International Monetary Fund (IMF) said Wednesday Egypt’s economy is likely to grow by 3.8 percent in 2014/15 and to rise “steadily” to 5 percent in the medium-term.
The report issued Wednesday on the occasion of Article IV consultations’ conclusion predicts that fiscal consolidation will slash the budget deficit below 8 percent of GDP by 2018/19.
“The adjustment is designed to preserve growth and inclusiveness: it accommodates the increase in spending on health, education, and scientific research mandated by the constitution, reforms subsidies to make them more efficient and equitable, raises taxes on high earners, and strengthens social safety nets through the development of cash transfer systems,” the IMF stated.
“Lower fiscal deficits will support the targeted reduction in inflation to 7 percent over the medium term,” added the report.
Egypt and the IMF have had a tense relationship since the January 25 Revolution, because of the international lender’s efforts to persuade Cairo to undertake economic reforms such as subsidy cuts and impose a value added tax.
Since President Abdel Fatah al-Sisi took office eight months ago, the government has begun to apply economic and fiscal reforms, including tax amendments and cutting fuel subsidies.
Experts as well as the Ministry of Finance have stated they hope that having this report ahead of the economic summit set to be held in Sharm el-Sheikh in March would enhance investors’ confidence in Egypt’s economy.