International Monetary Fund (IMF) Managing Director Christine Lagarde arrives for the opening of the Egypt Economic Development Conference (EEDC) in Sharm el-Sheikh, in the South Sinai governorate, about 550 km (342 miles) south of Cairo, March 13, 2015 (Photo: Reuters)
International Monetary Fund (IMF) chief Christine Lagarde said on Friday Egypt was on the right path after embarking on economic reforms but cautioned the country needs to do more to achieve needed growth.
Speaking during Egypt's Economic Development Conference in Sharm El-Sheikh Red Sea resort, Lagarde praised the government's decisions to slash energy subsidies and increase sales taxes on cigarettes and alcohol.
"Let me start with the good news. The journey to higher growth has already begun," she said.
She added that over the past few months, there have been promising strides on the reform front.
Lagarde applauded Egypt's project to dig a second canal in August to allow two-way traffic of larger ships in the Suez Canal before her tone turned more critical as she emphasized the importance of living up to the trust Egyptian people have shown in their government.
She wondered about the country's competitiveness, citing Egypt's rank in the World Bank's "Doing business" report. The country comes 119th out of 140 countries surveyed by the Doing Business team.
"Egypt can do better. With the right policies, and the right level of ambition, Egypt could crack the top 50 in global competitiveness," Lagarde said.
To achieve that goal, Lagarde called for more reforms, calling for an opening of international trade to increase Egypt's non-petroleum exports which account for 5 percent of gross domestic product.
Lagarde also noted that only 10 percent of Egyptians have bank accounts, saying that figure should increase.
She said more growth was needed, adding that what really counts is sustainable and inclusive growth that would reach youth and women whose participation in the economy is limited to 22 percent. Lagarde also said the disabled and other marginalized groups should benefit from the growth.
"If implemented efficiently, more spending on health and education could support higher and more inclusive growth, while preserving fiscal sustainability", Lagarde said.
She added that Better education could also help narrow wage gaps that discourage women from working in the private sector. And of course, there is also a link to physical infrastructure. Better public transport would make it possible for women to travel safely to jobs further away from where they live.
" For its part, the IMF remains committed to helping Egypt achieve better living standards" she concluded.