Abstract
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Egypt’s economic policies sharply changed direction in 2004 following the appointment of a pro-reform cabinet led by Prime Minister Ahmed Nazif. The new cabinet moved quickly to put in place a number of key trade, foreign exchange, and tax policy reforms. The government also announced plans to restructure the financial sector and privatize most state enterprises, while taking steps to modernize fiscal accounts and strengthen monetary policy.
In concluding the IMF’s annual review of the economy in May 2005, the IMF Executive Board commended the Egyptian authorities for the clear change in the direction of economic policies and progress made thus far. The pace of economic recovery picked up in 2004, with real GDP increasing by 4.8 percent in the first half of fiscal year 2004/05 (July-December 2004), compared with the same period a year earlier. Growth was driven largely by strong external demand and underpinned by a moderate revival in consumption and improved investor confidence. Egypt’s current account surplus expanded to 4.4 percent of GDP in the fiscal year ending June 30, 2004 and is estimated to be slightly higher for fiscal year 2004/05. External conditions are expected to remain favorable, and the recovery is likely to strengthen during fiscal year 2005/06.
Egypt’s fiscal year ends June 30. Figures for 2004/05 are staff estimates.
| Egypt | 2001 | 2002 | 2003 | 20041 |
|---|---|---|---|---|
| (annual percent change) | ||||
| Real GDP | 3.2 | 3.1 | 4.1 | 4.8 |
| Consumer price inflation (end-of-period) | 2.7 | 4.0 | 11.7 | 9.0 |
| (billions of U.S. dollars) | ||||
| Exports of goods and services | 15.8 | 18.0 | 22.9 | 28.9 |
| Total oil and gas exports | 2.4 | 3.2 | 3.9 | 5.7 |
| (percent of GDP) | ||||
| Current account balance | 0.7 | 2.4 | 4.4 | 4.5 |
| General government balance | -2.5 | -2.4 | -2.5 | -3.1 |
| General government borrowing requirement | 7.9 | 7.1 | 6.6 | 7.1 |
| Net public debt | 61.9 | 65.9 | 65.7 | 63.7 |
Egypt’s fiscal year ends June 30. Figures for 2004/05 are staff estimates.
| Egypt | 2001 | 2002 | 2003 | 20041 |
|---|---|---|---|---|
| (annual percent change) | ||||
| Real GDP | 3.2 | 3.1 | 4.1 | 4.8 |
| Consumer price inflation (end-of-period) | 2.7 | 4.0 | 11.7 | 9.0 |
| (billions of U.S. dollars) | ||||
| Exports of goods and services | 15.8 | 18.0 | 22.9 | 28.9 |
| Total oil and gas exports | 2.4 | 3.2 | 3.9 | 5.7 |
| (percent of GDP) | ||||
| Current account balance | 0.7 | 2.4 | 4.4 | 4.5 |
| General government balance | -2.5 | -2.4 | -2.5 | -3.1 |
| General government borrowing requirement | 7.9 | 7.1 | 6.6 | 7.1 |
| Net public debt | 61.9 | 65.9 | 65.7 | 63.7 |
Egypt’s fiscal year ends June 30. Figures for 2004/05 are staff estimates.
The IMF Board noted, however, that considerable challenges lie ahead to complete Egypt’s transformation into a dynamic, private sector-driven economy. Output growth remains below the threshold needed to absorb labor force growth, while government borrowing and debt remain high. The IMF Board encouraged the authorities to maintain the pace of structural reform in the financial, trade, and privatization areas while pursuing decisive fiscal consolidation and strengthening the monetary policy framework to help boost private investment and growth.