Egypt’s exports and foreign direct investment (FDI) underperformance will be aggravated by the repercussions of the ongoing coronavirus (COVID-19) pandemic, according to the latest World Bank (WB) report.
The report, entitled “MENA Economic Update: How Transparency Can Help the Middle East and North Africa”, said that Egypt’s macroeconomic stabilisation programme was largely successful. It helped in supporting growth, generating a solid primary budget surplus, reducing the debt-to-GDP ratio, and replenishing reserves. The report added that, despite the success stories, vulnerabilities do still persist, notably in the country’s exports and FDI.
The economic crisis, one of the fallouts from the virus, underscores the urgency of resolving structural challenges to safeguard a sustained recovery. This would take place through addressing the business environment constraints, while enhancing revenue-mobilisation to create the fiscal space needed to advance the human capital agenda, the report added.
Transparency on critical economic issues, such as public debt and employment, will be the key to driving growth and enhancing trust in government across the Middle East and North Africa (MENA) region, the report said.
The need for greater transparency comes as the region faces unprecedented dual shocks from the coronavirus and the collapse in oil prices, the report said. It added that the collapse of oil prices hurts both oil exporters directly, and oil importers indirectly, through declines in regional remittances, investment and capital flows.
Even in Egypt, there are issues concerning the lack of available key information on public debt, and concerning the precision of the definitions used to compute labour-market indicators, the report said.
The MENA region’s low output of statistics is also reflective of a lack of micro data, especially regarding enterprises and prices. The lack of micro business statistics in the region, for instance, implies that the economic structure, in terms of the types of firms in each sector, is unknown.
The report recommended that countries respond with policies in two parallel steps. The first is to address the health emergency and the associated economic contractions, with the second to start putting into place transformative and largely budget-neutral reforms, such as debt transparency and restructuring of state-owned enterprises.