Egypt needs 1 million new jobs annually to sustain economic growth: Finance minister

Doaa A.Moneim , Sunday 11 Jun 2023

Egypt needs to create one million new jobs each year to accommodate its growing population and sustain economic growth, Minister of Finance Mohamed Maait said on Sunday during a panel discussion with the International Monetary Fund (IMF).



Maait stressed that achieving 100 percent private-sector-led growth is crucial for Egypt, to meet the high demand for job opportunities. He highlighted Egypt's State Ownership Policy, which aims to increase the private sector's share in the local economy from 30 percent to 65 percent in the coming years.

The panel, which is held in Cairo under the title “Expecting the Unexpected.. Strengthening Fiscal Risk Management in MENA”, is co-organized by the IMF, Egypt's Ministry of Finance, and the Economic Research Forum (ERF).

It features key speakers such as Antoinette M. Sayeh, Deputy Managing Director of the IMF; Mohamed Al-Ississ, Jordanian Minister of Finance; Abla Abdel-Latif, Director of ERF; and Abdul-Rahman Al-Hamidy, Director General of the Arab Monetary Fund.

“Egypt has been facing compound challenges since the COVID-19 pandemic, including climate change related threats, the repercussions of the war in Ukraine, and the surge in energy and commodity prices. For instance, the cost of borrowing has doubled since March 2022, posing a big challenge”, Maait pointed out.

He also mentioned that the crisis in Sudan has increased the number of refugees in Egypt to nearly 10 million, which further strains the country's fiscal situation.

For her part, IMF’s M. Sayeh stated that the MENA region should adopt a strategy that addresses the fiscal challenges, including those posed by refugees.

She said that MENA countries need to anticipate and prepare for the potential risks and adapt to these risks once they become a matter of fact.  

“In an uncertain world, budget revenue and spending often fall short of government plans. Volatile growth, high universal subsidies, and loss-making state-owned enterprises expose many low- and middle-income economies in the Middle East, North Africa, and Pakistan to such fiscal risks. These factors combined with adverse external developments, such as recent interest-rate rises and food and fuel price surges, put public finances under pressure in many countries”, she explained.

M.Sayeh arrived in Cairo last week to participate in the panel and to hold discussions with the Egyptian authorities on the IMF's $3 billion Extended Fund Facility programme.

It is worth noting that the programme's first review, which was scheduled on 15 March, has not been conducted yet.

On the other hand, the IMF published a paper – simultaneously with the panel discussion –  that addresses fiscal risk management in the MENA region.

According to the paper, the “MENAPEG” region—a group that includes economies in the Middle East, North Africa and Pakistan but excludes high-income Gulf countries—is particularly  vulnerable to fiscal risks, with small risks occurring in these countries every year.

Furthermore, the paper noted that once every eight years these countries suffer from larger shocks "that cause debt to increase by an average of 12 percent of gross domestic product."

The IMF's paper gave several reasons for this vulnerability, including the volatility of the region’s economic growth compared to other parts of the world; and the high reliance on resource revenue among hydrocarbon exporters such as Algeria, Iraq, and Libya.

Moreover, the paper stated that many state-owned companies in MENA are financially fragile and require regular government cash injections.

These companies tend to undertake "quasi-fiscal activities such as selling goods and services at below market rates or creating jobs, rather than being run on a commercially sound basis."

Moreover, the IMF's paper explains that contingent liabilities may also arise "from public-private partnerships (PPPs). For example, certain PPP contracts might require governments to compensate a private partner if collections, as in toll road projects, fall short of projections.”

For his part, Minister Al-Ississ said that good policies lead to good outcomes. He cited Jordan's imposing of tax evasion rules – without raising the current taxes or imposing new ones – as the reason why it has managed to lower its debt level, decrease its budget deficit, and increase its revenues in just 3.5 years.

Al-Ississ also asserted that international financial institutions (IFIs) have a critical role to play in supporting middle-income countries amid the ongoing challenges.


Short link: