Back to the complete issue
Thursday, 2 May 2019

Deeper structural reforms are needed for increased investment: BNP

Egypt needs to deepen structural reforms if it wants to spur private-sector investment and job creation, BNP Paribas said in a recent report (pdf). While macroeconomic imbalances have largely been corrected, structural issues such as the informal economy have not yet been fixed, BNP says. High government debt, insufficient job creation, and capacity constraints to absorb a high-growth population were also listed as potential growth impediments.

We’re going to become a net gas importer again by fiscal year 2020-21, the report suggests. That will put some pressure on the current account deficit, the bank suggests, noting that “only the start-up of new gas fields would enable the country to cover its domestic consumption needs, which are growing rapidly (+14% in 2017).” (The ramp up in imports, we note, will come as Egypt locks in imports not just for domestic consumption, but for processing and onward sale.)

The current account improvement is the “most significant outcome” of the reform program. This improvement was primarily driven by a sustained growth in expat remittances, tourism revenues, and Suez Canal returns since the government initiated the program in 2016. The current account balance should continue to improve over the next two years, although remaining in negative territory, the report says.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.