Egypt's Economic Performance Receives International Praise
Egypt's economic performance is internationally acclaimed... but challenges persist
At a time when the global economy is reeling under the weight of geopolitical turmoil, monetary fluctuations, and rising food and energy prices, Egypt stands out as an exceptional case among emerging economies, according to recent reports from prestigious international financial institutions.
Both the Institute of International Finance (IIF) and Oxford Economics described the Egyptian economy's performance as "resilient," praising its ability to absorb shocks and achieve relative stability despite internal and external challenges. However, this praise does not obscure the more important reality: radical reforms are still necessary to consolidate these gains and ensure they translate into real, sustainable growth felt by citizens before investors.
International Praise for Confidence in the Egyptian Economy
The most notable positive signals came from the IIF, which noted that the Egyptian market has been able to withstand regional tensions, including the escalation in the Middle East, without significant impact on portfolio flows. Egypt's sovereign bond risk premium fell to its lowest level in five years, reflecting growing investor confidence in the country's ability to meet its financial obligations.
Oxford Economics considered Egypt to be one of the most prominent emerging market beneficiaries of the decline in the US dollar, which has lost more than 9 percent of its value since the beginning of the year, the largest half-yearly loss since 1973. The institution explained that every 1 percent decline in the dollar increases emerging market growth by 0.3 percent, while a 10 percent decline contributes to a 1 percent boost in global trade. These indicators are in favor of the Egyptian economy, which relies heavily on trade and foreign investment for its growth.
Balanced Monetary Policies Amid Global Pressures
Commenting on the performance of the Egyptian economy, Gabriel Stern, head of emerging markets research at Oxford Economics, noted during an interview with Sky News Arabia that the decline in the dollar provides Egypt with an important financial cushion, particularly regarding external debt denominated in the US currency.
He praised the flexibility of the monetary policy pursued by the Central Bank of Egypt, particularly with regard to floating the exchange rate, stressing that the Egyptian pound has become an effective tool for absorbing shocks rather than a burden on the economy.
Stern explained that the Central Bank is successfully pursuing a balanced policy based on gradually reducing interest rates while maintaining a degree of tightness to curb inflation, creating a stable environment that supports investment attraction and stimulates economic activity.
The Offering Program: The True Test of the Seriousness of Reform
One of the most prominent criticisms directed at the Egyptian government is the slow implementation of the government's offering program, which is a key pillar of the reform program agreed upon with the International Monetary Fund. Kamal believes that the delay in implementing this program sends negative signals to the markets, despite the recent experiences of some private offerings demonstrating real investment appetite.
He added that the suspension of high-yield bank certificates has injected significant liquidity into the market, which is now looking for safe investment channels. Government IPOs represent a promising opportunity in this context, provided they are offered transparently and with fair pricing. This can contribute to enhancing the confidence of both local and foreign investors.
In addition to supporting the public treasury, accelerating the pace of IPOs enhances the competitive environment and sends a message to the international community that the government is serious about reducing the state's economic role in favor of the private sector, a key component of any sustainable reform model.
Opportunities Available in a Supportive International Climate
Ironically, the international climate today appears more supportive than ever for emerging markets, with the decline of the dollar and the easing of global monetary tightening. Egypt can capitalize on this opportunity by accelerating reforms, particularly in the areas of energy subsidies, market liberalization, and enhancing local production in vital sectors such as industry, agriculture, and tourism.
Joining the BRICS group could also open new financing avenues and reduce reliance on traditional Western institutions, allowing decision-makers greater latitude in managing the national economy.
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