The International Monetary Fund (IMF) has called for the Egyptian authorities to ‘manage the exchange rate more flexibly’ in its annual review of Egypt’s economy.
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.
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