23 June 2017 10:34 PM

The Economist: Sisi started to put Egypt back on sensible economic track

Saturday، 11 March 2017 - 10:46 AM

There are signs that President Abdel Fattah El Sisi is starting to put Egypt back on a more sensible economic track, The Economist said in its weekly edition.

 

In an editorial themed "Egypt’s economy shows signs of life", the UK magazine said the Egyptian government has raised the price of subsidized fuel and electricity, brought in new taxes and allowed the Egyptian pound to float but such measures would serve the country's economy.

 

"Though the medicine was bitter, it seems to have been just what was needed to lure foreign investors back into the Egyptian market," The Economist said, in reference to the economic measures taken by the government.

 

A sale of $4bn-worth of government bonds in January was more than three times oversubscribed, and foreign purchases of Egyptian treasury notes doubled in the same month.

 

This appetite for investing in Egypt partly reflects a broader demand for emerging-market debt. But it is also a clear sign of growing confidence in the Egyptian economy, noted the report.

 

That change in mood is also felt by Egyptians working abroad. Remittances, which accounted for as much as 7% of GDP in 2012, slumped by a fifth last year as people held onto foreign currency rather than send it home to be converted into overvalued pounds. Since the currency has floated, remittances are rising once more, said the weekly magazine.

 

A weaker currency is also spurring growth, albeit gradual, in trade and tourism. Non-petroleum exports increased by 25% in January compared with the year before, it noted.

 

Earnings from exports, along with new loans from the IMF and other sources, are plumping up the country’s foreign-currency reserves, said the report.

 

"In February they hit their highest level since 2011, promising to ease a shortage of dollars that has hindered Egyptian business."

 

There are signs that a broader recovery may come soon, it said.

 

The weaker currency is proving a fillip to some manufacturers, as consumers switch from expensive imports to cheaper domestic alternatives, noted the report. "Egypt’s trade deficit in January was 44% smaller than it had been a year earlier."
MENA

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