by Mahmoud Fouly
CAIRO, May 2 (Xinhua) -- Egypt's ongoing economic reform program has improved the country's economy with expectations of higher growth by world financial institutions including the International Monetary Fund (IMF).
In an annual report released Wednesday, the IMF expected Egypt's economic growth rate to reach 5.2 percent in the 2017-18 fiscal year (FY) and further accelerate to hit 5.5 percent in the 2018-19 FY compared to 4.2 percent last year.
Egypt's fiscal year starts in early July and ends in late June.
The IMF report said that Egypt's expected higher growth rates are "aided by an increase in gas production."
The country marked in late January the early production of Zohr gas field, the largest in the Mediterranean Sea, which was discovered in the Egyptian offshore by Italy's oil giant Eni in August 2015.
"One of the reasons for the growth is the expansion of long-term national projects due to sustainability, not only due to the anticipated hike of gas production," said Abdel-Rahman Taha, an economic expert specialized in emerging financial markets.
He said that current national projects, including establishing new administrative regions in Cairo and other cities, are examples of sustainable development for they include residential, industrial, agricultural and commercial areas.
In mid February, Egypt's statistics authority revealed that the unemployment rate declined to 11.3 percent in the last quarter of 2017 compared to 12.4 percent in the same period in 2016.
"The economic growth rate now is better than the higher one before 2011 that exceeded 7 percent, because the current growth relies on labor-intensive projects that reduce the unemployment rate in the country," the expert told Xinhua.
Over the past few years, Egypt has been struggling to overcome an economic recession that resulted from political turmoil and relevant security challenges, which led the country in late 2016 to start a strict three-year economic reform program.
The program includes austerity measures, energy subsidy cuts and tax increases, in addition to local currency floatation to contain dollar shortage.
Despite causing price hikes and high inflation rates, the liberalization of the Egyptian pound's exchange rate encouraged the IMF to support Egypt's economic reform plan by a 12-billion-dollar loan, half of which has already been delivered to the North African country.
The reform program reflected on the general performance of the Egyptian economy and led to more confidence in the country's investment climate.
"The outlook for Egypt has improved relative to the October 2017 forecast. In the context of its IMF-supported program, improving confidence is boosting private consumption and investment, adding to the increase in exports and tourism," said the IMF May 2018 report entitled "The Middle East, North Africa, Afghanistan, and Pakistan Regional Economic Outlook."
Taha said that the transparency and openness of the Egyptian government, as well as the current stability and security in the country, are among the main reasons behind the investors' confidence in the Egyptian economy.
Egypt is working on increasing its exports as one of the main sources of national income and hard currency, and it increased its non-oil exports by nine percent to exceed 21 billion U.S. dollars in 2017, according to the trade and industry minister.
The country's annual exports to European countries rose by 24 percent in 2017 and to African states by 17 percent in the first quarter of 2018.
Yomn al-Hamaki, an economics professor at Ain Shams University in Cairo, said that the economic reform program "has generally achieved its goals," while maintaining sustainability of such growth is very important.
"We are not yet out of the bottleneck and we have challenges to achieve sustainability of such growth," the professor told Xinhua.
"The government's budget plans subsidy cuts that will lead to further price hikes, which is a challenge, and more efforts need to be done to contain unemployment and raise the productivity of Egyptian workers," she added.
Egypt's foreign exchange reserves currently stand at 42.61 billion dollars, marking a record high after they kept declining from 36 billion dollars in January 2011 until reaching an alarming level of 13.5 billion in February 2013 due to political instability resulting from the ouster of two heads of state within a couple of years.
Improving sources of hard currency, recovering tourism, remittances of Egyptians abroad, and government's efforts to link the Egyptian expatriates to their motherland are key positive factors for the Egypt's foreign reserves, she said.
