Egypt’s Growth Rate Likely To Be 3.8% In 2024-25

Overcoming financial hiccups in the last couple of years, Egypt has made substantial progress toward macroeconomic stability and the International Monetary Fund (IMF) has upgraded its forecast growth to 3.8% during the financial year (FY) 2024-25, in light of the stronger-than-expected outturn in the first half of the year.

At the same time, the private investment share in total investment rose from 38.5% in H1 of FY2023-24 to almost 60% over the same period in FY2024-25. Inflation rose slightly to 13.9% in April but remains on a downward trend.

The current account remains wide, as rising imports, reduced hydrocarbon output, and Suez Canal disruptions offset strong tourism, remittances, and non-oil exports. Greater fiscal prudence—including through better oversight and control over large public sector infrastructure projects—is helping to contain demand pressures, with total public investment spending remaining below the established ceiling for July – December 2024. 

An IMF staff team led by Vladkova Hollar visited Cairo from May 6 to May 18, and held discussions with the Egyptian authorities on economic and financial policies that could underpin the completion of the Fifth Review under the Extended Fund Facility (EFF) arrangement. 

The IMF approved an $8 billion agreement in 2024 after first agreeing to a $3 billion programme in 2022.

It may be recalled that the Egyptian Central Bank has cut its key interest rates by 100 basis points last week due to accelerated economic growth and a downwards trend in inflation. It was the bank’s second rate cut this year.

Reforms Yielding Results

Hollar welcomed the efforts of the Egyptian authorities to modernise and streamline tax and customs procedures to increase efficiency and build confidence as these reforms have started yielding positive results.

“Alongside these efforts, domestic revenue mobilisation will need to continue, mainly by widening the tax base and streamlining tax exemptions, to support the government’s capacity to spend sufficiently on priority development and social needs. We also welcome the authorities’ efforts to develop a medium-term debt management strategy that aims to improve transparency and gradually reduce the large debt service cost in the budget,” she said.

She said that with the macroeconomic stabilisation now underway, it was critical for Egypt to carry out deeper reforms to unlock the country’s growth potential, create high-quality jobs for a growing population, and sustainably reduce its vulnerabilities and increase the economy’s resilience to shocks. 

In order to deliver on these objectives, decisively reducing the role of the public sector in the economy and levelling the playing field for all economic agents should be key policy priorities.

The implementation of the State Ownership Policy and the asset divestment program in sectors where the state has committed to reduce its footprint will play a critical role in strengthening the ability of the private sector to better contribute to economic growth in Egypt. Complementing this, efforts need to continue to improve the business environment, she added.