The fund forecasts growth of between 4.5 and 5.5 per cent in Egypt during 2009, a sharp fall from average growth of 7 per cent since 2005, but better than the average rate for the Middle East as a whole of just 3.9 per cent.

Egypt’s budget deficit is forecast to remain stable at 6.9 per cent of gross domestic product (GDP), with the country’s debt as a proportion of GDP falling throughout the year.

The annual Article IV review approves Egypt’s fiscal stimulus package for its economy, which amounts to some 0.5 per cent of GDP.

“Counter-cyclical policies are risky given Egypt’s poor initial conditions – its large fiscal deficit, high public debt, and high inflation – but staff judge the risk is worth taking in light of the record or reform and fiscal consolidation,” the report says.