Egyptian Government Aims to Boost Economic Growth and Reduce Inflation
CAIRO: In a bid to reduce inflation and boost economic growth, Finance Minister Mohamed Maait stated that the Egyptian government’s main priority is to bring inflation within the central bank’s target. Maait revealed that economic growth is expected to rise to 4.2 percent in the upcoming financial year, up from 2.8 percent this year, as reported by Reuters.
The government also plans to sell more state assets to decrease the state’s role in the economy, promote private sector ownership, enhance productivity, and generate revenue to lower Egypt’s debt.
However, Egypt’s economy has faced challenges in recent months due to the crisis in Gaza, impacting tourism growth and Suez Canal revenue—two significant sources of foreign currency for the country.
Speaking during the IMF Governor Talks series in Washington, Maait disclosed that revenue from the Suez Canal has plummeted by over 60 percent.
To address the economic challenges, the IMF has increased financial support to Egypt to $8 billion. Egypt has also devalued its currency, committed to transitioning to a flexible exchange rate, and secured a record $35 billion investment deal with a UAE sovereign wealth fund.
While inflation decreased to 33.3 percent in March from a high of 38 percent in September, it remains well above the central bank’s target range of 5-9 percent.
Over the past decade, Egypt financed major state projects, such as a new $58 billion capital in the desert, through significant borrowing abroad, leading to a quadrupling of its foreign debt.
The government aims to lower interest rates to reduce debt interest payments, with the central bank raising overnight interest rates by 800 basis points this year.
Maait revealed that the government has set a limit of 1 trillion Egyptian pounds ($20.6 billion) on all public investment, including military spending. He emphasized the importance of the private sector, aiming for it to constitute at least 65-70 percent of the economy.
Highlighting the role of the private sector in job creation, Maait stated, “An economy led by the private sector can create 900,000 or even more jobs. We have close to 1 million young people entering the labor market annually, and giving the private sector the opportunity to lead will benefit the state.”