STRONG MACRO FUNDAMENTALS
Egypt’s strong long-term fundamentals and favorable demographics have served the country well during challenging political and economic times. The country has a diverse economy with agriculture, manufacturing, retail, and real estate making up significant portions of its GDP. What is more, Egypt is the largest market in the MENA region by population with an increasingly young consumer base. Today, one in every four Arabs lives in Egypt.
A COMPREHENSIVE ECONOMIC REFORM PROGRAM
From 2016-2019, Egypt's government launched an ambitious economic reform supported by a USD 12 billion, IMF extended-fund facility to address deep-rooted problems in the economy. A key step in the program was the liberalization of the exchange rate, which enabled the rebuilding of the country’s foreign currency reserves. The government also worked to trim its budget deficit through restructuring of expenditures and fiscal consolidation. In September 2016, a 13% value-added tax (VAT) was implemented; the rate was later increased to 14%. Another key reform measure was the government’s gradual removal of energy and fuel subsidies. Additional reforms include the adoption of revised investment and bankruptcy laws. These efforts represent a sustainable solution to Egypt’s economic challenges that have helped unlock the country’s potential as an attractive investment destination.
September 2016 implementation of 13% value added tax
November 2016 liberalization of currency exchange rate
Gradual phasing out of unsustainable energy and fuel subsidies
Ongoing legislative and structural reforms
Central Bank of Egypt has mandated that SMEs make up 20% of banks’ portfolios by 2020
SIGNS OF ECONOMIC
RECOVERY IN 2018-2019
Egypt remained the largest FDI recipient in Africa in 2018
Real GDP growth reached 5.6% in FY19, up from 5.3% in FY18.
Consumer price inflation dropped to 7.1% in 2019 down from 33% in July 2017
In 2019, Egyptian pound strengthens to its highest in two and a half years since the IMF devaluation
Foreign exchange reserves increased to $45 billion in September 2019 compared to $13.4 billion in March 2013
Budget deficit fell to 8.2% of GDP in June 2019 from 12.2% three years ago
Tourism revenues rose to $12.6 billion in 2019 compared to $9.8 billion in 2018
The trade balance deficit dropped 21.9% in June 2019 compared to June 2018