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Euromonitor International’s Egypt Economy, Finance and Trade Country Briefing focuses on one of the Arab world’s largest and most populous economies that was harshly hit by the political upheaval experienced between 2011 and 2013. The political crisis left Egypt with very low levels of foreign exchange reserves, a soaring currency black market, very high levels of youth unemployment and a weak fiscal position. However, through subsidy reforms (that started since 2014) and higher infrastructure investment, Egypt is on the right path of recovery. Nonetheless, this is just the beginning; long-term steadfast reforms are needed, in order to restore macroeconomic stability.
After four prolonged years of political turmoil and sluggish economic growth, Egypt has set itself on a new path of reforms. The government has continued to embark upon fuel subsidy reforms since July 2014 that has helped slightly bring down its high budget deficit. Furthermore, in its 2016 budget, the government announced cuts in the total subsidy bill by 14.0% in the 2016/2017 fiscal year, mainly by reducing subsidies on petroleum products by approximately 43.0%. Through deeper cuts in fuel subsidies, the Egyptian government should be able to reallocate more resources to the poorer populace and towards labour-intensive activities, such as, infrastructure. The expansion of the Suez Canal project unveiled in August 2015 is expected to substantially increase current annual revenues and create a large number of new job opportunities. According to trade sources, the government plans to invest US$2.3 billion, during 2015-2020, on building large malls and superstores that is estimated to create 40,000 new jobs. In March 2015, the government announced a mega-project to build a New Cairo Capital, worth US$45.0 billion. However, Egypt has just begun its journey of reforms; continued steadfast reforms if implemented resolutely, should help sustain long-term economic stability, spur job growth, restore public finances and boost investment.