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IMF Asserts Private Sector's Role in Boosting Egypt’s Economy

IMF Asserts Private Sector's Role in Boosting Egypt’s Economy

Thursday, 28 April, 2022 - 09:15
Non-oil private sector activity contracts for the 16th month in a row (Reuters)

The International Monetary Fund stressed the role of the private sector in boosting the Egyptian economy, currently facing ongoing challenges and difficulties.

IMF Middle East and Central Asia Director Jihad Azour said in a press conference that the role of the private sector in Egypt is essential, and the state should support it.

Azour commented on the Egyptian president's decisions regarding the private sector, saying it is one of the main objectives set in the economic reform program in 2016, and the second program is to raise the level of private sector participation in the Egyptian economy.

He explained that the private sector in Egypt is dynamic, developed, and capable of leading the Egyptian economy.

The Egyptian government is working with the IMF to design a new loan-backed program to support the Egyptian economy and address the ongoing challenges against the severe repercussions of the war in Ukraine.

Azour mentioned that authorities have requested support from the IMF and that the team has started technical discussions with the authorities, saying that these discussions are progressing.

Azour said Egypt's external debt is not worrying after it rose to $145.5 billion at the end of December, compared to $137.4 billion at the end of September 2021.

He expects Egypt's public debt ratio to GDP to decline to pre-pandemic levels by 2025 or 2026.

According to the regional economic outlook that was released on Wednesday, the IMF expects public debt in Egypt to reach 94 percent of GDP during the current FY and to decline to 89.6 percent of GDP in the next fiscal year.

Growth for the group excluding Egypt is set to decelerate even faster, from 5.2 percent in 2021 to 3 percent in 2022

Egypt's headline purchasing managers' index (PMI) for the non-oil private sector fell to 46.5 in March, down from 48.1 in February, indicating a significant decline in the health of the country's non-oil economy.

On Tuesday, President Abdel Fattah al-Sisi ordered the government to set a program for the private sector's participation in state-owned assets, targeting $10 billion annually for four years.

The Egyptian president also ordered the government to list army-owned enterprises on the Egyptian stock exchange before year-end and start selling stakes in some state-owned companies in the stock market, state TV reported.

The government for years has been talking about selling state companies not owned by the military, and in 2018 it announced it would offer minority stakes in 23 state-owned companies on the stock exchange in a plan to raise to $4.33 billion.

The program has been repeatedly delayed due to weak markets, legal hurdles, and each company's financial documentation readiness.

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