Egypt’s economic situation continued to strengthen, in which the real gross domestic product (GDP) grew by 5.6% in the FY 2018-2019, recording the highest rate in 11 years, according to the European Bank for Reconstruction and Development (EBRD).
It added in its latest transition report named “Better governance, Better economies,” that Egypt’s inflation declined markedly to one-digit levels, the fiscal and current account deficits narrowed, and unemployment has declined to its lowest level in eight years.
“In fiscal years (FY) and 2020-21, we expect the GDP to rise by 5.9%. Growth will be supported by the continued strengthening of the tourism sector and of exports, large public construction projects including the building of the new administrative capital, natural gas production from the Zohr field and other new discoveries, the reengagement of private investors – both domestic and foreign – following the recent trend of interest rate cuts, and the continued implementation of business environment reforms and prudent macroeconomic policies.
The report praised the Egypt Tourism Reform Programme (E-TRP), stating that these measures were reflected in an increase in competitiveness and attractiveness.
It also pointed out to that Egypt had the fourth-highest performance improvement in the World Economic Forum’s Travel and Tourism Competitiveness Index 2019, which highlighted tourism’s revenue increase to $12.5bn in the FY 2018-2019, a record high.
“Structural reforms have progressed greatly. The government has taken effective steps towards reforming energy subsidies, widening social protection coverage, strengthening tax collection, and deepening the efficiency of financial markets, in addition to amending the investment law,” according to the EBRD’s report.
The EBRD briefed the key priorities for Egypt in 2020 in three points including prioritising the measures to improve private investment.
It further explained that laws encouraging private participation in certain public-dominated sectors should be implemented, and interest rates led by the Central Bank of Egypt (CBE) policy rates should continue to be lowered, in line with the decline in inflation.
“Sustained and advanced implementation of structural and fiscal reforms is essential to consolidating the gains in macroeconomic stabilisation. Expected reforms in the coming year include conducting a medium-term revenue strategy, promoting comprehensive privatisation of state-owned enterprises, improving the availability of and access to industrial land, reforming competition policies, and implementing e-public procurement,” the EBRD recommended.
The third point that the EBRD is developing solutions for water scarcity in the National Water Resources Plan.
It further explained that Egypt is already below the United Nations’ water poverty threshold and is approaching a state of “absolute water crisis”.
“There is an urgent need to develop non-renewable subterranean water extraction methods, desalinate water, manage wastewater and ration water usage,” the EBRD asserted.