The International Monetary Fund (IMF) has cut Egypt's growth forecast to 3.5 percent in fiscal year 2014/15 down from 4.1 percent predicted last April, on the back of security concerns affecting vital tourism revenues.
In its October 2014 Middle East and Central Asia Economic Outlook report released on Monday, IMF said, "In Egypt there are uncertainties about growth rate due structural and institutional weaknesses, credit risks, high public debt, security incidents are still keeping tourism away and largely unresolved structural problems, including electricity supply disruptions."
Meanwhile, the growth for fiscal year 2013/14 was 2.2 percent, and tourism receipts this year have witnessed a decrease of 48 percent to reach US$5.1billion, compared to US$9.8 billion during FY2012/13.
"International reserve coverage recently increased in Egypt but is still low and susceptible to downside risks," the IMF explained.
During September 2014, net international reserves (NIR) inched up to record US$16.87 billion, up from US$16.84 billion in August 2014
IMF added the manufacturing activity and net foreign direct investments (FDI) also show signs of recovery in Egypt.
FDI in Egypt increased by 9.8 percent, recording a net inflow of US$4.1 billion (1.44 percent of GDP) during FY13/14, compared to US$3.8billion (1.38 percent of GDP) last year.
The budget deficit is estimated to record LE240 billion, which represents 10 percent of GDP, compared to 14 percent of GDP in case no reform measures were incurred.
Fiscal consolidation measures largely target spending in Egypt, the largest savings are from generalized energy subsidy reforms initiated, this reductions are expected in Egypt (2.5 percent of GDP), IMF reported.
In Egypt, the poverty rate increased from 16.7 percent in 2000 to 21.6 percent in 2009 and 26.3 percent in 2013.
However, consolidation is slowing debt accumulation, though debt ratios and their servicing are still rising in Egypt.
Moreover, total government debt (domestic and external) reached LE1,907.8 billion (95.5 percent of GDP) at end of June 2014, compared to LE1,644 billion (93.8 percent of GDP) at end of June 2013.
