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Egypt Economic Monitor, Spring 2015 : Paving the Way to a Sustained Recovery

LIVING STANDARDS TARIFFS TERRORISM CONTINGENT LIABILITIES PLEDGES MONETARY POLICY DEFICIT WITHDRAWAL DEPOSIT DEBT ACCUMULATION HOLDING BASIS POINTS GOVERNMENT EXPENDITURES OIL PRICE DEPOSITS BROAD MONEY FINANCIAL MARKET PARTICIPANTS REAL INTEREST RATES STOCK CORPORATE TAX RATE INTEREST PUBLIC INVESTMENTS GUARANTEES DEBT STOCK INTEREST RATE REMITTANCE PRIVATE CREDIT EXCHANGE GOVERNMENT REVENUES ECONOMIC DEVELOPMENTS DISCOUNT RATE BALANCE OF PAYMENTS LIQUIDITY REPAYMENTS REAL INTEREST BLACK MARKET SHARES OF INVESTMENTS REVENUES CAPITAL ADEQUACY CAPACITY BUILDING DISCOUNT ASSET BASE CAPITAL STOCK TAX NON-PERFORMING LOANS CASH TRANSFER INCOME TAX BANKRUPTCY BENEFICIARIES GOVERNMENT GUARANTEES INFLATION ASSET RATIO DISPUTE RESOLUTION SAFETY NETS BUDGET GOVERNMENT SAVING MARKET PARTICIPANTS CENTRAL BANK MACROECONOMIC STABILITY LABOR MARKET TRADE BALANCE SOVEREIGN GUARANTEES OIL PRICES INVESTMENT SPENDING T-BILL RATES CURRENCY IMMUNIZATION CAPITAL GAINS PORTFOLIOS CORPORATE TAX RATES DEBTS CONTRACTS INFLATIONARY PRESSURES TAX REGIME INTEREST RATES FLEXIBLE EXCHANGE RATE MARKETS DEBT PRIVATE INVESTMENT HOUSEHOLD INCOME INFLATION RATE SETTLEMENT PUBLIC FINANCE BUDGET DEFICIT DOMESTIC DEBT LOANS DIRECT INVESTMENT RESERVES DEBT SERVICE RULE OF LAW CASH TRANSFERS LEGAL FRAMEWORK COMMODITY PRICE FINANCE FOREIGN CURRENCY PUBLIC INVESTMENT TAXES BANKING SECTOR FISCAL DEFICIT EXPENDITURE GOVERNMENT SECURITIES AUCTIONS INTERNATIONAL STANDARDS PREPAYMENTS EQUITY INCOME TAXES NATIONAL SECURITY INVESTORS INTEREST PAYMENTS TAX RATE GOVERNMENT BUDGET TRANSPARENCY PRIVATE SECTOR CREDIT DOMESTIC LIQUIDITY MARKET CONDITIONS FINANCIAL CRISIS MARKET PRICES FUTURE FOREIGN INFLOWS FOREIGN DIRECT INVESTMENT RETURNS FISCAL BURDEN TREASURY BILLS SHORT-TERM DEBT GOVERNMENT EXPENDITURE SAFETY NET STRUCTURAL PROBLEMS NATIONAL INVESTMENT REPAYMENT DISBURSEMENTS EXPENDITURES ISSUANCE CURRENT ACCOUNT DEFICIT TAX RATES T-BILL SHARES MARKET POLITICAL UNCERTAINTY FOREIGN EXCHANGE SECURITIES TREASURY INFLATION RATES CURRENCIES GOVERNMENT DEBT ECONOMIC DEVELOPMENT INTERNATIONAL DEVELOPMENTS INVESTOR GOODS SECURITY FINANCIAL MARKET INVESTMENT OUTSTANDING DEBT SHARE TAX SYSTEM POVERTY DEBT OBLIGATIONS OUTSTANDING DEBTS PRIVATE INVESTORS DEBT REPAYMENTS REVENUE PRIVATE INVESTMENTS EXTERNAL DEBT PROFIT INVESTMENTS TAX TREATMENT LENDING GOVERNMENT LENDING MATURITIES EXCHANGE RATE RISK AVERSION REMITTANCES PUBLIC SPENDING PROFITS LIABILITIES INTEREST RATES ON TREASURY BILLS ARREARS INTERNATIONAL MARKETS DEVELOPMENT BANK DEBT RELIEF
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Washington, DC
Middle East and North Africa | Egypt, Arab Republic of
2015-06-25T18:55:21Z | 2015-06-25T18:55:21Z | 2015-04

Egypt’s economic activity is gaining momentum. Growth accelerated to 5.6 percent during the first half of FY15, compared to a dismal 1.2 percent in the same period last year. The recent spike in economic activity reflects favorable base effects, but more importantly broad-based sector recovery, especially in tourism and manufacturing. On the demand side, growth continues to benefit from resilient consumption and government stimulus, supported by large financial inflows from Gulf States. In March 2015, Egypt held a high level Economic Development Conference, which culminated with the signing of sizeable investment deals worth US$36 billion, securing external financing worth US$24 billion, and the announcement of a new Gulf support package worth US$12.5 billion. This will boost the ongoing economic recovery and facilitate efforts to achieve macroeconomic stability. Annual growth is expected to double to 4.3 percent in FY15, and should increase further thereafter, compared to the muted growth of 2 percent during FY11-FY14. The International Monetary Fund (IMF) conducted its article four consultation in November 2014 and the final report generally commended the authorities’ medium term plans while highlighting some risks including slippage in implementing reforms and a large external financing gap. Egypt’s main risk is to sustain the ongoing economic recovery which requires improved security. Notwithstanding the authorities’ ambitious fiscal consolidation plan, the deficit and debt aggregates will remain high and unsustainable. Further, there are risks of policy slippage as some details and the exact timing of policy measures are still missing and implementation capacity remains a challenge. Further, sustaining the reform pace requires efficient and well-targeted safety nets, which might take time to build. Finally, there is significant uncertainty regarding the financing of the announced mega-projects and the potential contingent liabilities that may arise.

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