World Bank sees Egypt’s GDP growing 6% in 2021: Egypt’s GDP will grow 5.8% in 2020 and 6.0% in 2021, the World Bank forecasts in its latest MENA report. This is a slower acceleration than the Finance Ministry projected in its draft FY2019-20 fiscal budget, which sees economic growth hitting 6% at the end of the coming fiscal year. The bank also sees the government falling just short of its 7.2% budget deficit target in FY2019-20, instead predicting a deficit of 7.5% next year and 7.0% in FY2020-21.

Inflation will gradually decline over the next three years: The World Bank forecasts average annual inflation of 14.5% this year, 12.5% in 2020 and 10.7% in 2021.

The outlook sees Egypt’s current account stabilizing over the medium term, but warns that the end of the IMF program in June and falling yields on government bonds will put pressure on the capital and financial accounts.

Fiscal risks: Financially-weak state-owned organizations, government pension contributions and increasing interest payments will continue to pose fiscal risks. The automatic fuel price mechanism which came into effect yesterday will meanwhile help to mitigate the effects of oil price volatility.

Overbearing regulations, non-tariff trade barriers and the preferential treatment given to state companies will continue to hamper private sector growth. “The main challenge is to lift these binding constraints and create a level-playing field where competition can thrive,” the report notes.

The regional outlook isn’t quite as promising: The World Bank projects MENA GDP to dip slightly to 1.5% this year from 1.6% in 2018. Growth will then pick up to 3.4% in 2020 and 2.7% in 2021. “MENA countries should be growing at least twice the rates they currently do,” the bank’s chief MENA economist, Rabah Arezki, said. “To awaken its untapped potential, the region must transform its economies, strengthen market contestability and adopt a moonshot approach to the digital economy.”

Separately, the IMF’s senior resident representative in Cairo Reza Baqir is quoted by a domestic press outlet as saying Egypt’s debt load is high relative to its emerging market counterparts as it approaches 100% of GDP. Egypt has set a target of reducing public debt to 89% of GDP in its upcoming 2019-2020 budget.