The International Monetary Fund praised Egypt's progress in stabilizing its economy, saying however that it should focus on the private sector to provide jobs to millions of its people.
In remarks to a government meeting released late Saturday, IMF First Deputy Managing Director David Lipton credited Egypt for instilling market confidence, cutting debt and driving growth.
It must now enable private-sector economic activity to expand and provide the jobs needed by millions of Egyptians, he added.
He described strong global growth, projected at 3.9 percent for 2018 and 2019, and low interest rates likely to rise as “a good window of opportunity for Egypt to undertake reforms...that may not be open for too long.”
The government secured a $12 billion loan from the IMF in 2016 and launched an austerity program that included subsidy cuts.
As examples, Lipton mentioned Indonesia, Mexico and India as countries where reform efforts empowered the private sector by ending cronyism and government monopolies, encouraging competition and boosting the social safety net.
“[Egypt needs] a less heavy footprint of the public sector in the economy, especially in business and commerce, to clear away room for the growth of the private sector and to relieve entrepreneurs from the un-winnable matchup of competing with the public sector,” Lipton continued.
He called for slashing domestic industry protections that have kept local companies from entering the global supply chain.
The IMF has forecast that Egypt will grow by 5.2 percent this fiscal year, up from about 4.1 percent a year earlier.
But Lipton said private sector-driven policies that better utilize the country’s vast segment of unemployed youth could push this as high as 6-8 percent in coming years.
“If this country can tap the potential of its young people—by bringing unemployment and labor force participation to the level of many other emerging market countries—their absorption into the economy could boost growth into the range of 6 to 8 percent. That would be a transformation.”
