Egypt forecasts inflation rate will slip to 13 percent by end of 2018: Finance Minister

12 Feb 2018

Egypt's finance minister Amr El-Garhy forecast on Sunday at that the inflation rate of the Egyptian pound would slip to 13 percent by the end of the year.

El-Garhy stated during the third annual Arab Fiscal Forum in Dubai that he predicts that inflation would drop from January 2018's 17 percent mark, stressing that the inflation rate is easing towards levels targeted by the Central Bank of Egypt (CBE).

The forum, which is organized by the Arab Monetary Fund and the International Monetary Fund (IMF), was attended by IMF Managing Director Christine Lagarde and a number of Arab finance ministers and monetary experts.

Last week, Egypt’s official statistics agency, CAPMAS, announced that the annual urban consumer price inflation rate has declined to 17.1 percent in January, down from 21.9 percent in December.

Inflation has soared since Egypt’s decision to float its currency in November 2016, recording almost 35 percent in July 2017, the highest level in decades.

However, the rate of inflation has been slowing over the past several months, with the CBE raising key interest rates by 700 points since the flotation to curb the soaring inflation.

El-Garhy highlighted the country's economic reform programme and positive developments in the Egyptian economy, as represented in the rise of the economic growth rate, a decline in the primary budget deficit and total budget deficit to the GDP, and the improvement of the balance of payments indicators.

Last month, Egypt announced that its primary budget deficit fell to 0.3 percent of GDP, recording EGP 14 billion in the first half of fiscal year 2017-18, down from 1.1 percent of GDP, or EGP 39 billion, during the same period in the previous fiscal year.

This is the lowest Egypt's primary budget deficit has reached in 10 years.

The minister pointed out that Egypt seeks to return to the global financial market, referring to the issuance of Eurobonds in the upcoming days, but was still awaiting the stabilization of the global market.

He added that foreign investment in Egyptian government securities increased recently, reaching $20.2 billion despite a low interest rate on bonds, which increased the trust of investors in the stability of the Egyptian economy following bold economic reforms.

El-Garhy's announcement follows major economic reforms undertaken by the Egyptian government intended to generate revenues and tighten spending.

Among the reforms are the introduction of a 14 percent value-added tax and the cutting of fuel subsidies.

Egypt's reforms are supported by a $12 billion IMF loan, agreed upon in November 2016 and aimed at curbing the country's gaping budget deficit.

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