Page 51 - issue-25-fr

ÉLITE FRANÇAISE
NUMÉRO 11, NOVEMBRE 2020

Beyond the Economic reform Program

Antony Gobriel

structural imbalances that would reduce the
For decades, Egypt has suffered from low
budget deficit, putting public debt on a
inclusive growth. Despite its high growth
downward path, and reforming the exchange
rates, Egypt is suffering from chronic
regime. These reforms will boost the
economic and social problems such as
competitiveness of the Egyptian market not
poverty, inequality, unemployment -
only domestically but also internationally.
especially among women and young people -
Accordingly, investment should increase, the
and corruption. Those were the main motives
private sector will be more developed and
that led to the January 25th revolution,
many jobs will be created. On one hand, these
calling for “bread, freedom, and social
reforms are supposed to stimulate inclusive
justice ”. However, the situation has not
growth. On the other hand, it should
improved after 2011, as FDI has declined
transform the role of the state from leading to
significantly in response to the global crisis
promoting growth. Thus, the decision of
and the lack of political stability and security switching to the flexible exchange regime was
taken in November 2016, as the first structural
in Egypt. Furthermore, structural economic
reform measure in the program. This decision
imbalances, such as the state's control of the
raised Egypt's external competitiveness, by
pound's exchange rate, have also led to a
increasing exports and its foreign exchange
reduction in the foreign exchange reserves
reserves. Yet, it doubled the dollar ’s price
that, in 2016, was only enough for three
against the Egyptian pound, triggering a
months of importation. Moreover, the
violent inflationary surge unconstrained by
inefficient fuel-support system also gave on to
austerity monetary policy. The price increase
a rise in public debt that exceeded 100% of
was 30% in 2017, 14% in 2018, and 9% in
GDP in the fiscal year 2016/2017, and
2019. Also, to fill the general budget deficit,
although some measures have been taken,
the value-added tax was imposed, along with a
such as a 5% devaluation and an increase in
reduction in public sector wages, resulting in
fuel and electricity prices, those decisions had
an increase in tax revenue equal to 2.5% of the
only increased inflation, as the pound's
GDP, and a reduction equal to 3.5% of GDP
exchange rate was 25% higher than its real
to the initial expenditure. In addition, the
value before the complete devaluationThus,
inefficient fuel subsidy dependent on the
the government ’s objectives were, to achieve
fluctuations in the world oil prices, and
macroeconomic stability by correcting

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