QU: Please assess the state of the Egyptian
economy?
The economy has recovered. It has turned the corner. The
growth rate has gone up from 3.5% to 6.%. Growth was 3.2% in
2004, it went up to 5.2% in 2005 and we are anticipating 6%
for 2006. We are anticipating 6.7% to 6.9% for 2007.
There is a large push coming from investment,
there is a large push coming from consumer spending. There
is an equally large push coming from gas discoveries
coming on stream. These were made over the last three or four
years ago, and now they are beginning to produce.
The budget deficit is still large, at 6%
to 8% of gross domestic product. We are just coming
out of five years of stagnation, and therefore revenues
started to stagnate while expenditure did not.
The tax and customs reform has increased
tax and custom revenues and over the next three years, I expect
the budget deficit will decline. I am anticipating the budget
deficit will fall to between 2% and 3% by 2010 or 2011.
Inflation is down. It has been as high
as 17%, but is now of the order of 3.2%. The average for the
year is 3.7%.
The balance of payments and current accounts
are in surplus. Exports are growing by an average of 30% per
year, so employment in that sector is growing by the same amount.
The exchange rate is stable. It has
tendencies to appreciate but fortunately it has not done so
to any great extent. It has protected the tradable sector.
