IMF strikes upbeat tone on Egypt’s medium-term growth: The IMF expects constraints on Egypt’s growth to ease as regional tensions subside and structural reforms are implemented, it said in its most recent Regional Economic Outlook (pdf). The Fund noted that “an assumed easing of the conflict in Gaza and Israel next year and steady implementation of reforms are projected to help lift growth in Egypt to 4.1% in 2025 and above 5% over the medium term.”

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Remember: The IMF has kept our growth forecast for the current fiscal year unchanged at4.1%, after slashing it 0.3 percentage points in July. This is higher than both the Madbouly government’s and the World Bank’s growth forecasts for the current fiscal year, which come in at 4.0% and 3.5%, respectively.

Our efforts toward fiscal consolidation are winning us accolades: The Fund noted our significant steps toward reducing our primary deficit through subsidy reforms and improved revenue collection, including tax base expansion. This, coupled with the planned use of some of our Ras El Hekma funds to pay down our debts, has the Fund penciling in a six percentage point decrease in our public debt by the end of FY 2024-25.

There’s still room for improvement, though: The fund noted that Egypt is among the countries that would be well-served by liberalizing interest rates, increasing private ownership in the banking system, and developing capital markets, saying that “financial sector policies that foster competition, reduce the dominance of state-owned banks, and encourage the broadening of the investor base can advance financial development and facilitate higher growth and inclusion.”

On a regional basis: The IMF now sees the MENA region and Pakistan growing 2.1% this year, down 0.6 percentage points from its earlier estimate of 2.7%. Regional growth is expected to rebound in 2025 to 4%.

** We dove into the Fund’s forecast for the MENA region in this morning’s Planet Finance.

The story was also picked up by international press: Reuters | Bloomberg.

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