Egypt’s economy is recovering after policymakers launched ambitious and politically difficult reforms to remedy years of economic mismanagement. Since November 2016, the Central Bank of Egypt has floated the currency and liberalised the foreign exchange (FX) market, helping to curb overvaluation of the local currency and reduce FX shortages. In addition, the central bank tightened monetary policy to contain inflation pressures. On the fiscal side, the government launched a three-year fiscal consolidation program to reduce persistently high budget deficits, including removing inefficient energy and food subsidies and strengthen social safety nets and the business climate. These measures have helped restore confidence in the economy and attract investment.
Real GDP grew an estimated 5.5% in 2019 on the back of continued strength in exports and investment and increasing oil prices. The IMF forecasts expects growth to average 6% per annum over the next five years. Ongoing implementation of reforms would help address long-run structural imbalances, including high government debt, low investment and weak labour productivity.