Egypt Independent

Egypt’s economic reforms start to bear fruit: Financial Times



The Financial Times said on Monday that economic reforms in Egypt have started to bear fruit.
 
According to the publication, Egypt reappeared on the "investors' radar" after reducing the deficit in the balance of payments, achieving stability in foreign exchange reserves, floating the pound, and conducting several economic reforms under the supervision of the International Monetary Fund (IMF).
 
The paper described the 18 percent increase in the Egyptian pound's price compared to the US dollar over the last month as one of the most important currency increases in emerging markets in the past five years.
 
The article expects inflation rates to decline after economic reforms start achieving a deeper effect, pointing out that the increase in the Egyptian pound exchange rate would limit price hikes. 
 
The newspaper reported a rise in tourism revenues and remittances from expatriates, which contributed to improving US dollar liquidity after years of shortage. It added that there are signs that consumer spending and business investment have begun to recover as well, and referred to analysts' expectations of an increase in the GDP from about 3.4 percent to 4 percent in 2018.
 
The Financial Times' Medley Global Advisors LLC (MGA), a premier provider of macro policy intelligence to the world’s top investment banks, had expected the US$12 billion IMF loan to Egypt to face many challenges due to the budget deficit and public debt. Medley predicted that the IMF might modify the objectives of the loan in light of the decline in the pound price after flotation and the high inflation rate.
 
The Financial Times expects the inflation rate to decline by half by the end of the current fiscal year in June 2017.
 
Any sudden increase in the international prices of oil products may force the Egyptian government to reduce fuel subsidies in a faster pace than scheduled.
 
The paper warned of the risk of suspending economic reforms in the period preceding the presidential election in 2018.
 
With a bit of luck, economic growth rates will increase, especially after the end of the month of Ramadan, which usually witnesses a rise in food prices, the newspaper said, describing Egypt as the most attractive market for investment in the world, among emerging economies.