1887

2024 OECD Economic Surveys: Egypt 2024

image of OECD Economic Surveys: Egypt 2024

Growth has held up better in Egypt than in neighbouring countries until recently but inflation has reached very high levels and financing conditions have tightened along with foreign currency shortages. In this context, Egypt is stepping up economic reform efforts. The exchange rate needs to become more flexible with monetary policy geared to bring inflation down to target. High public debt makes Egypt more vulnerable to external shocks. Committing to a credible consolidation strategy is key to restore public finance health, which would improve investor confidence and thereby reduce debt servicing costs. While expanding cash transfers to the most vulnerable, broad-based energy subsidies should be phased out, which would also reduce emissions. As public investment has expanded substantially, further efforts to rationalise large-scale construction projects should be pursued, while allocating resources to green investment. To revive private sector growth, the regulatory burden and the state footprint ought to be reduced, and ongoing reforms including the divestment plan should be implemented fully and effectively. As the working-age population will expand with a rising education level, younger generations need to be better integrated into the labour market. This requires reducing labour taxation, enhancing public employment support and better aligning skills to labour market needs.

SPECIAL FEATURES: IMPROVING THE BUSINESS CLIMATE TO REVIVE PRIVATE SECTOR GROWTH; PROMOTING BETTER-QUALITY JOB CREATION FOR INCLUSIVE GROWTH

English

Key policy insights

Growth has held up better in Egypt until recently than in neighbouring countries in the face of several major external shocks, and the government has started to implement structural reforms to address macroeconomic imbalances and improve longer-term growth prospects. Following the ongoing slowdown, growth is projected to pick up, provided inflation subsides, financing conditions normalise, and uncertainty dissipates, which requires prudent monetary policy and steadfast commitment to fiscal consolidation. Stepping up reform efforts would help improve investor confidence, alleviate external pressures and keep debt service costs in check. It would also bolster the economy’s resilience against future shocks. Egypt is particularly exposed to the consequences of climate change, highlighting the importance of green policies. Energy subsidies should be reduced and social benefits target the most vulnerable people. Public investment should focus on green infrastructure that promotes private sector investment.

English

Graphs

This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error