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Sunday, 11 April 2021

Economic Reform Program 2.0?

It appears that the government is working on an update to the 2016 economic reform agenda that will focus on “sustainable growth”and further diversifying the economy to better guard against external shocks, Planning Minister Hala El Said said (watch, runtime 11:43) at a conference last week. The plan appears to be working on five tiers:

  • A focus on promoting growth sectors, with ICT, agriculture, as well as health and education becoming priority sectors for public spending.
  • Spending on infrastructure and development targeting the country’s poorest villages.
  • HR and vocational training: Developing the country’s vast labor force through technical education.
  • Growing the green economy by making green projects constitute at least 30% of government projects over the next fiscal year.
  • Increasing the role of the private sector in the economy — which the Sovereign Fund of Egypt (SFE) has already been spearheading through the state-led privatization program.

The program seeks to build on Egypt’s 2016 economic reform program, says El Said. “The sustainability of this growth requires the continuation of structural reforms, which the government, represented by the prime minister, will announce in the coming days,” she said. The government had previously said it is targeting a 2.8% growth rate this fiscal year, which it hopes to increase to 5.4% in the coming year.

A much-needed update? Egypt has consistently scored well on the reform front in multiple IMF reviews, but could benefit from a number of further improvements, which have been called for by both the IMF and industry players through the years. This includes a more relaxed regulatory environment to encourage private sector participation, as well as more logistical and financial support for the industrial sector.

The covid crisis becomes a covid opportunity: International Cooperation Minister Rania Al Mashat had announced that Egypt would look to initiate a second wave of post-covid reforms focused on improving the business environment for the private sector. She said last year that covid-19 has expedited, rather than derailed, certain aspects of Egypt’s reform program — such as expanding social security nets and upping financial inclusion.

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