Egypt Economic Monitor, December 2022: Strengthening Resilience through Fiscal and Education Sector Reforms

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Amidst repercussions from the Russia-Ukraine conflict, lingering supply chain disruptions, and tightening global financial conditions, Egypt is experiencing a spike in inflation and has suffered abrupt large-scale portfolio outflows; adding pressures to the country’s already stretched public finances and external accounts. The Central Bank of Egypt (CBE) has undertaken exchange rate and monetary policy adjustments since March 2022 by allowing the exchange rate to depreciate and by raising key policy rates, in order to contain the widening trade deficit, capital reversal and the ensuing drop in foreign exchange buffers. In tandem, the government announced social mitigation packages. The authorities’ efforts to restore macroeconomic stability, rebuild reserves, and push ahead with structural reforms is supported by the 46-month International Monetary Fund (IMF) program, along with other multilateral and bilateral financing and investments. This report provides an update on the recent economic developments and outlook of the Egyptian economy, while embedding the analysis in long-standing challenges. It also features a Special Focus on Education Sector reforms that draws on the World Bank Egypt Public Expenditure Review for Human Development Sectors. A key message is that education spending, its efficiency, and the overall learning outcomes require improvements in order to meet the needs for robust human development, poverty reduction, improved equity, and long-term growth. According to the report, there are three key (inter-connected) priorities going forward: (1) establishing sustained macroeconomic stability and enhancing the competitiveness of Egyptian economy to ensure resilient sources of foreign income activities (exports and FDI). This requires continuing to push ahead with business environment reforms; (2) streamlining budgetary and off-budget expenditures and increasing revenues to create the fiscal space required to allocate more resources for priority areas (such as the education sector); and (3) unleashing the private sector’s potential in higher value-added and export-oriented activities to create jobs and improve living standards.
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World Bank. 2022. Egypt Economic Monitor, December 2022: Strengthening Resilience through Fiscal and Education Sector Reforms. © Washington, DC: World Bank. License: CC BY 3.0 IGO.
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