The International Monetary Fund offered support to Egypt's economic policies on Wednesday, after an executive review of its first broad consultations with Cairo authorities since before the country's 2011 uprising set off years of political instability.
The long-delayed assessment projected the economy to grow 4.3 per cent in the fiscal year 2015/2016, confirming a forecast of 3.8 per cent growth for the current one, which ends on June 30. Growth for the previous period stood at 2.2 per cent.
"Directors welcomed the improved economic outlook and supported the authorities' plans to restore macroeconomic stability and spur inclusive growth and employment," the IMF said in a statement, noting that Egypt's "starting point is difficult."
Unrest since longtime autocrat Hosni Mubarak's overthrow four years ago has battered the Egyptian economy. The vital tourism industry is a shadow of its former self and foreign investors have been hesitant to commit to what they once considered a promising emerging market.
The government has invited business delegations and heads of state from around the world to attend an investor conference in March. It is reforming investment laws in an attempt to improve transparency and slash Egypt's notorious red tape, hoping to attract the foreign capital needed to boost growth and provide jobs for a population surging toward 90 million.
The IMF welcomed Cairo's moves to reduce energy subsidies and the budget deficit in its latest fiscal consolidation.
"It accommodates the increase in spending on health, education, and scientific research mandated by the constitution, reforms subsidies to make them more efficient and equitable, raises taxes on high earners, and strengthens social safety nets through the development of cash transfer systems," it said.
Unemployment, which stood at 13.4 per cent in 2013/14, is expected to drop to 13.2 per cent and then 12.7 per cent in the following two years, it said.
Looking ahead, the IMF advised the government to broaden tax revenues and continue to reform subsidies and public sector wage and hiring practices.
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