A mission of the International Monetary Fund (IMF) began a two-week visit to Egypt on Wednesday to conduct the third review of the Egyptian economy. The IMF, in collaboration with the Central Bank of Egypt (CBE) and the Egyptian government, will co-host a high-level conference in Cairo from 5-6 May on promoting higher economic growth and job creation in Egypt. The aim of the event is to recognise the successes Egypt has achieved in macroeconomic stabilisation, and to help build consensus among stakeholders around the reforms needed going forward to attain higher and more inclusive growth, and to create jobs sustainably to meet the needs of Egypt's young and growing population. Prime Minister Sherif Ismail, IMF First Deputy Managing Director David Lipton, CBE Governor Tarek Amer, and Minister of Finance Amr El-Garhy will be among the speakers. Meanwhile, the IMF said in Wednesday's Regional Economic Outlook Update report that growth is improving in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP). The report added, however, that the region is not fully benefitting from the stronger global outlook and that the fragile recovery requires further reforms that will help diversify economies, create jobs, and secure resilience. The report mentioned that the outlook for Egypt has improved relative to the October 2017 forecast, and, in the context of its IMF-supported programme, improving confidence is boosting private consumption and investment, adding to the increase in exports and tourism. The report said that Egypt's economic growth is projected to rise to 5.2% in fiscal year (FY) 2017/18, rising from 4.2% last year and accelerating further to 5.5% in FY 2018/19, aided by an increase in gas production. The report mentioned that inflation pressure in the region has abated, with inflation broadly stable at about 12%, which largely reflects the receding impact of one-off factors in Egypt and Sudan. The report added that policymakers have already started to evaluate their public sector wage bills in the context of fiscal reforms, noting that some countries, including Algeria, Egypt, Iraq, Morocco, and Tunisia, have taken measures, such as wage and hiring freezes, to adjust public employment and compensation. The report said that international experience suggests that the gains from such measures are difficult to maintain over the medium term. At a predicted average growth rate of 4.9% from 2018 to 2022, growth rates remain too low to effectively reduce unemployment in the region, particularly for young people. The report said that with the labour force expected to expand 2.2% a year, 6.2% of sustained growth is needed annually just to maintain unemployment at its current level of 10%, while achieving higher growth will require an acceleration in structural reforms that allows the private sector to flourish and generate the required jobs.
