Egypt seeks confidence boost as IMF assesses economy . . . . . . . . . . . . A mission from the International Monetary Fund will be visiting Egypt on Wednesday in response to the Egyptian government invitation to assess the country’s economy. The IMF mission will start “article IV” consultations, an assessment by IMF experts of financial and economic state of affairs, senior advisor to the US secretary of state David Thorne said on Tuesday, in front of the biggest US trade delegation ever to visit Egypt. In fact, the visit is a response to the government’s invitation to the IMF that took place in September, as a step to encourage foreign INVESTORS and raise confidence in the Egyptian economy. Minister of Industry and Foreign Trade Mounir Fakhry Abdel Nour said in September the Egyptian government will perform economic consultations with the IMF to open new paths for cooperation with the IMF. IMF MANAGING Director Christine Lagarde has hailed Egypt’s recent economic reforms, particularly the bold decision of cutting energy subsidies. Lagarde also showed her readiness to attend the international donors’ conference in Egypt next February. The government will present “various INVESTMENT megaprojects we have recently launched, such as the Suez Canal development project, the North Coast development project, and various infrastructure projects, in addition to all that Egypt is doing in terms of reforming the subsidies system and other financial reforms like achieving a stable budget deficit,” Egypt Central bank Governor Hisham Ramez told Asharq Al-Awsat last month. Thereafter, experts from the IMF will write down a report about the Egyptian economy, which will be the first since three years. Egypt needs a positive assessment from the IMF before the Economic Summit next year that aims to enhance investors` confidence. IMF cuts Egypt growth forecast The IMF slashed Egypt’s growth forecast in October to 3.5 percent in the fiscal year starting July 2014, compared with 4.1 percent estimated in April. The main reason behind the cut in Egypt’s growth forecast cut is security issues, which are keeping tourists away and weighing on gas exports, the IMF report said. Other issues such as electricity supply disruptions, further weakening of private INVESTMENT confidence in the Egyptian economy, are also behind the Washington based lender’s cut to the biggest economy is North Africa outlook, the report added. The IMF has showed aggravating concerns from the double-digit inflation and unemployment levels. The cut in energy subsidies, took place in July, pushed the general price level that will probably average 10.9 percent this year, while continue rising to 13.4 percent next year. The significant rise in prices have added to Egyptian’s agony as it cut their purchasing power, at the time the economy is still reeling from the aftermath of the 2011 uprising, which toppled President Hosni Mubarak and left the country in a status of political and economic instability. Poverty in Egypt edged up from 16.7 percent in 2000 to 21.6 percent in 2009 and 26.3 percent in 2013, the IMF said. With many people unemployed, the government is facing a daunting challenge, where the rate of youth unemployment exceeds 30 percent, which may spark another revolution. International support The IMF has mentioned in order for Egypt and other MENA countries to have a sustainable rising growth, it has to get some international assistance to put the economy on the right track. The support should include “scaled-up FINANCING, enhanced trade access, policy advice, and capacity building,” the IMF has noted. U.S. Treasury Secretary Jacob Lew said his country is ready to help Egypt in receiving emergence loans, should Cairo shows more serious steps to overhaul the economy. Lew mentioned that the U.S. has provided Egypt with hundred million dollars, but they were not enough to meet the Arab’s most populous nation needs. Therefore, is planning to raise the IMF FINANCING and economic program to help Egypt resume its economic reforms. While bailout talks have failed for three years, it may occur during the upcoming months after the government has responded to the recommendations suggested by the IMF. It is worthwhile to mention that Egypt has been largely depending on the financial aids coming from the GCC rich nations, more specifically Saudi Arabia, United Arab Emirates and Kuwait. The loans have helped Egypt to meet its energy needs while helped foreign reserves to increase, prompting Rating Agencies to raise Egypt’s credit rating. #egyptyard
Posted on: Wed, 12 Nov 2014 10:37:13 +0000