IMF Lowers Egypt's 2017 Growth Forecast as Reform Costs MountBy
Sees 3.5% expansion in 2017, down from 4% in October report
Egypt is overhauling economy and floated the pound last year
The International Monetary Fund lowered its 2017 growth forecast for Egypt, reflecting the economic toll from the government’s decision last year to float the pound and introduce a reform program.
Egypt’s real gross domestic product will expand 3.5 percent this year, less than the IMF’s 4 percent projection in October, the lender said in its latest World Economic Outlook on Tuesday. Growth will rebound to 4.5 percent in 2018, the report said -- close to the government’s target in its new budget.
The Nov. 3 decision to float the currency was pivotal in helping Egypt secure a $12 billion IMF loan, though it also caused inflation to surge above 30 percent. That’s a severe burden in a country where around half of the 92 million residents live near or below the poverty line, straining officials’ ability to deliver on promises of expansion while they try to maintain stability.
The IMF’s report comes as Egyptian officials are in Washington to discuss the release of the second tranche of the loan, while an IMF delegation is expected in Cairo around the end of April for the first review of the lending program.
Though inflation and government measures including subsidy cuts have weighed on growth, the central bank said on Tuesday that inflows into the financial sector reached $19.2 billion since the pound was floated.