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World Bank Optimistic about Second Batch of Egypt’s Economic Reforms

World Bank Optimistic about Second Batch of Egypt’s Economic Reforms

Wednesday, 17 July, 2019 - 08:45
Traditional decorations for sale in Cairo, Egypt. (Reuters)
Cairo - Asharq Al-Awsat

The World Bank said Tuesday that the Egyptian government has been executing a crucial economic reform program since 2016 to accomplish economic stability and restore trust in the economy.

The most important reforms are the enhancement of the investment climate, the attraction of private investments, and legislative reforms embodied in new investment laws pertinent to restructuring, and bankruptcy, it said in a report, “The Egyptian Economy Observatory”.

It highlighted that the second batch of economic reforms will consist of stabilizing the economy, enlarging the role of the private sector, creating more jobs, qualifying more labor with the necessary skills and improving the quality of life of citizens.

The report underlined that the economic reform program made investments and net exports the main drives for GDP growth instead of consumption. The outcome is that the economy grew by 5.3 percent in FY2017/2018 compared to 4.2 percent in FY2016/2017. The average GDP growth rate between 2013 and 2016 is 3.5 percent. In the first half of the last FY2018/2019, the GDP grew by 5.4 percent.

For the first time since FY2008/2009, the private sector has become the main driver for economic growth in FY2017/2018. The shares of the private sector and total investment in that growth are 1.3 percent and 2.4 percent respectively.

The report estimated that the GDP growth will continue rising until it records 6 percent in 2021. It also estimated that private investments will continue to increase as a result of the prospective reforms relevant to the investment climate. It estimated the same for public investments, particularly in the infrastructure sector.

Exports are expected to rise gradually, if the revenues of tourism and the Suez Canal continue to surge. That is in addition to the expected huge increase in oil exports.

FDI is expected to continue rising until it hits 3 percent in 2021.

The report said there is much unexploited growth opportunities in the Egyptian economy, particularly in the export sector in light of the many trade agreements Egypt is part of.

World Bank Country Director Marina Wes stated that the report presents the Egyptian government’s achievements and the World Bank’s vision for the sustainability of such accomplishments.

Wes affirmed that Egypt has achieved a lot when it comes to sustainable development and economic growth, which has become among the highest in the world. The report focused on the opportunities available to ensure the continuity of the economic growth and the increase in exports.

Senior Economist at the World Bank Hoda Youssef presented the report that showed a decline in unemployment, the positive response of economic indicators to the economic reforms and the rise of Egypt’s credit ratings.

Egyptian Minister of Investment and International Cooperation Sahar Nasr stressed the strong relations Egypt has developed with the World Bank, pointing to the partnerships in economic reform and the development of education and healthcare.

She revealed there are talks with the bank on ways to attract more investments. Egypt is trying to benefit from the positive stance of international organizations to improve the investment climate and bolster the participation of the private sector in mega projects, such as Benban Solar Park, which was rewarded the World Bank’s Best Project Award.

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