Egypt announced on Tuesday the launch of the second phase of its economic reform programme, which shifts focus on structural reforms, after a wrap-up of the first phase of the IMF-backed economic reform programme that has been in progress since 2016.
Dubbed the ‘National Structural Reform Programme’ (NSRP), the three-year structural reform phase aims to back the economy and bolster comprehensive and sustainable growth.
Prime Minister Mostafa Madbouly said in a press conference that the newly announced structural programme does not include imposing new financial burdens on citizens, with the government aiming to improve the standard of living and a continued subsidising of food commodities and spending on social protection programmes.
He said that Egypt is aiming for a growth rate of six to seven percent in the next three years and is targeting a primary surplus of two percent in the upcoming period and lowering the budget deficit to 5.5 percent by 2023-2024.
Diversifying the production structure of the economy has been selected as a main pillar of the programme, with a focus on three sectors, including the processing industry, agriculture, telecommunications and informational technology, and other pillars like developing the business environment, maximising the role of the private sector, and achieving the flexibility in the labour market, among others.
It will be implemented over two stages, a short-term stage that extends to 18 months from the date of implementation, a medium-term stage set at 18 to 36 months, and a long-term stage that lasts for approximately five years.
It includes a package of policies that affects the aggregate supply in the economy, including reforms in the structure of the economy, trade liberalisation, reforms in the vocational training system, the development of financial markets, reforms in the labour market and the education sector and others.
The second phase has been designed to include several topics of priority to the state in the upcoming period amid important changes in the regional and international geopolitics.
The main elements of the structural programme are based on supporting the business environment and bolstering the role of the private sector, targeting increasing Egyptian exports, bolstering domestic savings, implementing economic digitalisation, and ensuring equality in localising needed reforms between governorates.
It targets the real sector and the three interlinked markets, including the money market, trade market, and labour market, with an increased focus on diversifying the productive structures for three main sectors of priority, which include industry, agriculture, and telecommunications and information technology.
The program will focus on reforms in the legislation, government performance, logistics, funding, and demographic sectors.
In implementation since 2016, the first phase of the country’s reform program included the floatation of the Egyptian pound, lifting nearly all fuel subsidies, implementing a value-added tax, and raising the prices of electricity and transport.
The IMF-backed measures of the first phase, which concluded in November 2019, helped Egypt secure a needed $12 billion loan from the global lender.
Egypt said its economic reform programme has helped cushion the negative repercussions of the coronavirus crisis.