Efforts by the Egyptian government to stimulate economic growth are beginning to take effect, says the Washington-based IMF.

In the bank’s latest article 4 assessment on Egypt published on 11 February, the fund says that government measures coupled with a recovery in confidence are starting to produce “a turnaround”.

Growth is projected to reach 3.8 per cent in 2014/15, and anticipated to rise steadily to 5 per cent over the medium term.

Fiscal reforms are also expected to bring the budget deficit below 8 per cent of GDP by 2018/19 and reduce the level of government debt.

The IMF recognises the government’s efforts to cut expenditures and increase revenues, while it also ramps up spending on health, education and scientific research as required by the Egyptian constitution.

The fund also said that it views the Egyptian government’s reforms for business, investment and the financial sector as ”critical” to encourage competition and generate private sector growth.

Low oil prices will also provide an opportunity for Egypt to accelerate reforms such as the cuts to energy subsidies, the fund said.

The IMF directors added that although government measures would strengthen the government’s balance of payments, financing needs would remain in the medium term.

It recommended a more flexible exchange rate that would help improve the availability of foreign exchange for households and businesses, as well as strengthen the competitiveness of Egypt’s exports and attract foreign direct investment.

The article noted that Egypt’s economic situation would continue to remain difficult due to regional and domestic security risks.

To counter these difficulties, the IMF recommended the swift implementation of reforms, the strengthening of international reserves and continued efforts to rebuild confidence.