Egypt has unveiled a long deserved economic policy aiming to secure foreign aid and investment which are crucial to revive the country's economy. The new adopted policy includes introduction of value added tax and sale of stakes in government companies.
The African country has been struggling to restore investor confidence and trying to unlock more aid in a bid to adjust the budget deficit. The deficit may reach 11.5% of the country's economic output during the fiscal year ending on June 30. Sherif Ismail, the Egyptian Prime Minister has warned the nation of still remaining in the danger phase while addressing the parliament on Sunday, according to a report published in Bloomberg.
The Central Bank of Egypt has raised its key interest rate last week by the most since 2006 following a devaluation of its currency by more than 10%. The moves appear to be part of a package measures designed to address a foreign currency crunch. The shortage in FX reserves has impeded growth, hampered foreign investments since the foreigners have to face difficulties while repatriate funds, reports Gulf News.
Under the new economic program, Egypt has targeted an economic growth rate of 5-6% by the end of the fiscal year 2017-18. The most populous Arab country has set goal for achieving 6% growth during the following years, reports Ahram quoting the Egyptian Prime Minister while addressing the parliament on Sunday. The World Bank has revised its forecast for Egypt's economic growth to 3.8% during the current fiscal year from 4.5% predicted in June 2015. The cut in growth forecast has been made citing a shortage in foreign currency reserves. However, the World Bank predicts for increasing growth during the following years driven by higher level of investments. The Egyptian Prime Minister has expressed his keenness over introducing a value added tax (VAT). Tarek Amer, Governor of the Central Bank of Egypt has cited the move as mandatory to receive the first $1 billion tranche out of $3 billion World Bank loan, sanctioned last December. Egypt has been expecting $15 billion to $20 billion foreign investment in government debt notes this year following a dramatic hike in interest rates. The increase in interest rates has pushed yields on treasury bills and bonds significantly higher this month, informed Amer while addressing a televised interview on Saturday evening.
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