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Egypt
| The appointment of a new Cabinet in July 2004 ushered in a new phase in Egypt's economic policy management. Personal and corporate tax rates were halved, energy subsidies reduced and several enterprises were privatized. A series of reforms implemented since then improved Egypt's fiscal sustainability through restructuring of expenditures and increasing revenues to reduce the budget deficit and public debt. Monetary reforms helped strengthen the financial sector and enhanced the Central Bank of Egypt's performance, paving the way for a more developed phase of financial sector reforms which commenced in 1Q2009. These measures, along with more comprehensive business-related reforms, reduced the time and cost of doing business in Egypt and succeeded in restoring confidence in the overall economy. Real GDP growth rose from 4.1% in 2003/2004 to 7.2% in 2007/2008. Foreign direct investment increased significantly topping US$13 billion. The Egyptian Stock Market boomed. The higher domestic growth and international commodity prices fuelled inflation, which peaked at 24% in August 2008. It has declined since then, as commodity prices dropped, registering 10.2% in May 2009. The global financial crisis started to impact Egypt towards the end of 2008, with the drop in external demand negatively affecting revenues from tourism and the Suez Canal in addition to workers' remittance. Share prices on the Egyptian Stock Exchange fell back, in line with global markets reactions. A recovery in the global economy, better than expected performance in tourism and the Suez Canal, and a recovery in domestic activities led to a rebound in domestic growth in 1Q2009, with expectations of a continued recovery in 2009. Trading and share prices have also recovered, with the EGX30 rising 34% year-to-date. |
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