The IMF's staff report for the fourth review of the Egyptian economy said that Egypt advanced in international rankings for doing businesses, yet Egyptian authorities acknowledge that more measures to be done to make Egypt an attractive destination for private investment. Egypt advanced eight positions in the World Bank's Ease of Doing Business ranking for 2019 and 15 positions on World Economic Forum's 2018 global competitiveness index, reflecting the reforms implemented so far, the report elaborated. Egypt prioritised reforms which address key impediments to private sector-led growth and have potential to generate significant economic returns over a relatively short period of time, added the report. The report said that foreign direct investments (FDIs) will record $9.5bn in fiscal year (FY) 2018/19, $11.2bn in FY 2019/20, $12.6bn in FY 2020/21, and $15bn in FY 2022/23. These reforms aim to improve the efficiency of resource allocation by strengthening competition, improving governance and limiting the scope for corruption, as well as reducing the state's role. The reforms have progressed well thus far, with some delays due in part to capacity constraints. The authorities are committed to carry the momentum forward beyond the programme period, mentioned the report. Improving availability and access to industrial land is critical for private sector development, the report asserted, noting that the current system of industrial land allocation-which narrowly prescribes land use and sells it at a nominal fixed price on a first-come-first-served basis-is ineffective. The current system leads to land misallocation and forgone state revenues, and is prone to perceptions of corruption, the report added, noting that in September 2018 the authorities formed a working group under Prime Minister Mostafa Madbouly, in order to prepare a reform plan for moving toward a transparent, competitive, and market-based mechanism for industrial land allocation, operated through an online platform. The plan's first draft, prepared in December 2018, was an important step forward in this direction. However, it fell short of the structural benchmark in providing sufficient operational details to form the basis for land allocation guidelines, the report mentioned. Notably, it did not envisage competitive bidding, which is critical to minimise land misallocation. Nevertheless, authorities expressed commitment toward developing new guidelines for industrial land allocation based on the same key principles. The guidelines were scheduled to be approved by a ministerial decree and published by end-March 2019, yet the date was adjusted. Significant progress was achieved in improving transparency and accountability of state-owned enterprises (SOEs), the report noted, adding that authorities issued an update to the June report at end-December, which now includes about 300 SOEs with abridged financial statements added for most of them. They also published a supplementary report, which among other useful information, contains a description of the legal framework governing state ownership of SOEs and the impact of the SOE sector on government finances. It lacked, however, details on the impact of the SOE sector on the economy. Despite the shortfalls, the reports constitute a significant achievement in disseminating information on SOE governance, said the report, noting that as authorities develop capacity, they plan to improve the quality of SOE reports, which will be published annually.
