IMF: Egypt making progress on reforms but must widen tax base
The International Monetary Fund on Tuesday said Egypt is making progress towards economic stability, but said authorities still need to widen the country's tax base.
'As Egypt's macroeconomic stabilisation is taking root, it is now time to accelerate and deepen the reform efforts to reduce the state footprint, level the playing field, and improve the business environment,' the fund said.
An IMF staff mission held discussions with officials in Cairo from May 6 to 18 that could support the completion of the fifth review under Egypt's extended fund facility deal.
The IMF approved an $8 billion agreement in 2024 after first agreeing to a $3 billion programme in 2022.
'Egypt has made substantial progress towards macroeconomic stability,' mission chief Vladkova Holler said in a statement.
The fund said it had upgraded its economic growth forecast for Egypt for the 2024-25 fiscal year to 3.8 per cent. The Central Bank of Egypt last week said it expected real gross domestic product to increase by 4.3 per cent in the 2024-25 fiscal year after a slowdown in growth of 2.4 per cent in fiscal year 2023-24.
While inflation slightly rose to 13.9 per cent in April, the fund noted it remains 'on a downwards trend'.
The central bank cut also cut its key interest rates by 100 basis points last week due to accelerated economic growth and a downwards trend in inflation. It was the bank's second rate cut this year.
Egyptian Prime Minister Mostafa Madbouly has previously said the country would implement more subsidy cuts on fuel, bread, diesel, electricity and water under the IMF programme.
The fund said it welcomed officials' efforts to improve tax and customs procedures to increase efficiency and build confidence.
The IMF also noted reforms are beginning 'to yield positive results'.
'Alongside these efforts, domestic revenue mobilisation will need to continue, mainly by widening the tax base and streamlining tax exemptions.'
'With the macroeconomic stabilisation now under way, it is critical for Egypt to carry out deeper reforms to unlock the country's growth potential, create high-quality jobs for a growing population, and sustainably reduce its vulnerabilities and increase the economy's resilience to shocks," it said.
The fund said it would continue to hold virtual discussions on policies and reforms that could help support the completion of the fifth review.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Zawya
an hour ago
- Zawya
Global economy's 'sugar rush' defies trade drama
FRANKFURT - For all the drama surrounding U.S. President Donald Trump's trade tariffs, the world economy is holding up better than many had expected. The latest data from the United States, China and, to a lesser extent, Europe are showing resilience and the global economy as a whole is still expected to grow modestly this year. This is in part due to U.S. buyers and foreign sellers bringing forward business while many of the import duties unveiled by U.S. President Donald Trump remain suspended. While that effect may prove short-lived, Trump's decision to pause tariffs and some glimpses of progress in trade talks, particularly between the United States and the European Union, have fuelled cautious optimism. "We are seeing a bit of a sugar rush in industry, with manufacturers bringing forward production and trade," said Holger Schmieding, an economist at investment bank Berenberg. "The other thing is that we have evidence that Trump pedalled back on tariffs. The bet in markets and to some extent in the economy is that he barks but doesn't bite." Investment banks and institutions generally expect the United States to avoid a recession this year and the global economy to keep growing. The International Monetary Fund downgraded its global GDP growth forecast by just 0.5 percentage points last month to 2.8%. This is roughly in line with the trend over the past decade and a far cry from the downturns experienced during the COVID-19 pandemic, the 2008 financial crisis or even the turmoil that followed the 9/11 terror attacks in 2001. No one is venturing a prediction on where the trade negotiations will eventually settle, particularly with a U.S. president who sees himself as unstoppable. This week alone, separate U.S. courts first blocked and then reinstated Trump's tariffs - creating a degree of legal uncertainty that will do little to facilitate trade deals between the United States and those threatened with the levies. While the EU celebrated "new impetus" in its trade talks with the United States, negotiations with China were "a bit stalled" according to U.S. Treasury Secretary Scott Bessent. Companies are counting the cost of the ongoing impasse. A Reuters analysis of corporate disclosures shows Trump's trade war had cost companies more than $34 billion in lost sales and higher costs, a toll that is expected to rise as ongoing uncertainty over tariffs paralyses decision making at some of the world's largest companies. Car-makers from Japan's Toyota to Germany's Porsche and Mercedes-Benz are bracing for lower, or lower-than-previously expected profits if they have not given up making predictions altogether, like Volvo Cars and Dutch-based Stellantis. This is likely to result in a hit especially for Japan. The United States is Japan's biggest export destination, accounting for 21 trillion yen ($146.16 billion) worth of goods, with automobiles representing roughly 28% of the total. "While the worst shocks may be over, there's still a lot up in the air," Xingchen Yu, a strategist at UBS's Chief Investment Office, said. "We don't really know what a new normal for tariffs would look like, unfortunately." PAYBACK But so far the global economy has held up pretty well. China's output and exports are resilient as its companies re-route trade to the United States via third countries. Even in Europe, manufacturing activity was at a 33-month high in May, rebounding from a slump induced by more expensive fuel following Russia's invasion of Ukraine. Confidence was also buttressed by the prospect of greater fiscal spending in Germany, a missing ingredient for European growth for the past couple of decades. The robustness of the world economy has surprised even professional forecasters. A measure produced by U.S. bank Citi that tracks the degree to which global economic data has surprised to the upside is now at its highest in more than a year. Some of that strength circles back to the tariffs themselves and the attempts by U.S. households and businesses to front-load purchases to beat anticipated price increases later this year. U.S. imports were up around 30% in March from where they were in October. The risk to the upbeat outlook comes from the expected "payback" of those advance purchases, which are unlikely to be repeated and will mean slower activity - in the U.S. and elsewhere - later. Economists still fear a triple whammy in which the front-loaded boost to the goods sector is unwound while U.S. household purchasing power is squeezed by higher prices and companies put off investment and hiring. At the margin, however, this scenario is starting to appear a little less likely after Trump's pause on tariffs. "The balance has slightly shifted towards more optimism, albeit with uncertainty and volatility," ING's global head of macro Carsten Brzeski said. ($1 = 143.6800 yen) (Additional reporting by Dan Burns in Washington, Claire Fu in Singapore, Ellen Zhang in Beijing and Leika Kihara in Tokyo; Editing by Mark John and Jane Merriman)
Zawya
an hour ago
- Zawya
Saudi Arabia's Alfanar eyes India's green hydrogen sector
Saudi Arabia-based Alfanar Group is preparing to enter India's emerging green hydrogen market once clearer policy and regulatory frameworks are established, a senior company executive said. Mohammed Irfan, Chief of Alfanar India told local financial newspaper The Economic Times, that unlike the renewable energy sector — where long-term power purchase agreements (PPAs) are secured through entities like NTPC and SECI — India still lacks assured offtake agreements for green hydrogen. The parent company is currently developing a green hydrogen project in Egypt and a green ammonia project in Chile, he said. Alfanar's renewable energy portfolio stands at about 1.7 gigawatts (GW) across Spain, India, and Egypt. In India, Alfanar operates a 506.5 megawatts (MW) wind power project in Gujarat with an additional 50 MW under construction. (Writing by SA Kader; Editing by Anoop Menon) (
The National
an hour ago
- The National
Pyramids celebrate first ever African title and set sights on competing with Al Ahly and Zamalek
Egyptian upstarts Pyramids celebrated a first ever African title on Sunday night – but their Croatian coach Krunoslav Jurcic admitted they still face a struggle to assert themselves domestically. Having secured a 1-1 draw away in Pretoria against Mamelodi Sundowns in the first leg, the Egyptians were slight favourites heading into the decisive return game on home turf. And so it transpired, with their 2-1 win on the night sealing a historic 3-2 aggregate victory. Pyramids' goals came from Congolese striker Fiston Mayele in the 24th minute and defender Ahmed Samy 10 minutes into the second half. Sundowns managed to reduce the arrears with a goal from Ikram Reiners in the 75th minute, but the hosts saw the job through. Pyramids – who changed their name, moved to Cairo and won promotion to the Egyptian top flight seven years ago – were able to celebrate by far the biggest night since adopting their new identity. It was only their second trophy – after Egyptian Cup success last season – and came in just their second CAF Champions League campaign. They have been seeking to emerge from the shadow of Cairo giants Al Ahly and Zamalek, who have not only dominated Egyptian football but often the Champions League as well. 'When I started with the team last season, we played excellent football and had a long run of winning matches in a row but even then, this was not enough to be champion [in Egypt],' said Jurcic. 'This year again, we were very close but you know that Al Ahly is the best club in Africa, they are very good, they are very strong, and it's very difficult to compete against a club like them.' The 55-year-old Jurcic was delighted that his pre-match appeals for support led to a 30,000-strong crowd at Sunday's decider in the June 30 Stadium, usually largely empty for their games. Cairo's passionate football followers traditionally support either Al Ahly or Zamalek, with precious little affection for any of the other sides based in the city. 'I'm very grateful for the crowd that came today,' said Jurcic after lifting the trophy. 'Usually we get to the stadium 90 minutes before kickoff and there is no one here. 'It's disheartening for the players, and I find it's my job to transmit positive energy to try to get them up for the matches.' The former Croatia international, who played for his country when they finished third at the 1998 World Cup, patrolled the touchline like a man possessed, jumping up and down and cajoling his players throughout the 90 minutes of action. 'I believe that I can transmit my energy in a positive way, and I think that we can be competitive in the future with all the best teams in Egypt,' he added. 'But whether we can stay a force is something to see in the future.'
