The IMF’s Regional Economic Outlook report came out yesterday and was broadly in line with expectations. The Fund says “a more favorable global environment is helping to improve economic prospects in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP), although growth prospects remain subdued. To improve growth and boost living standards, countries in the MENAP region face an ongoing need to enact strong and lasting structural reforms, while consolidating their fiscal positions.”

On Egypt, specifically, the IMF says inflation has been driven by exchange rate adjustment, implementation of value-added tax, reduction of energy subsidies, and increases in food prices. “As the impact of these one-off factors fades over time, and supported by prudent fiscal and monetary policy, inflation is expected to moderate over the medium term,” the fund says. The IMF also suggests that tighter monetary policy could weigh on lending growth in 2017. For the banking and finance sector, it suggests that Egypt should be one of the MENAP countries that need to strengthen “their insolvency and bankruptcy regimes; and, in some cases, their deposit insurance arrangements.”

Debt levels remain high in Egypt, the report notes, with significant debt-service burdens, but the recent fiscal trends are “encouraging,” even though there is “a need to push subsidy reforms through to completion.” Along with the potential for slower reforms, policy implementation could be derailed and economic activity weakened with a worsening of security conditions or social tensions.

The IMF still expects external imbalances will remain sizable in countries including Egypt, suggesting a continuing need for fresh external inflows. While there are still some downside risks to oil price increases for oil-importing countries including Egypt, the “risk would be partly offset by higher remittances and other foreign support from oil-exporting countries in the region.”

One clear recommendation the IMF made to Egypt, Jordan, and Morocco is the need to support “efforts to increase female labor force participation” in order to combat persistently high unemployment rates. Download the full report here (pdf) or visit the landing page for additional goodies.