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Egypt posts decline in trade deficit in 2017
January 03, 2018
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CAIRO: Egypt’s 2017 trade deficit fell 26 per cent year on year by $12 billion, the trade ministry said. Imports declined in the first 11 months of 2017 to $51 billion from $61 billion the same period in 2016, and exports increased to $20.4 billion from $18.4 billion, the ministry said in a statement.

It said it expected exports to reach 22.4 for the whole of 2017, compared to 20.4 for the whole of 2016.

It did not give a figure for the current trade deficit.

Foreign trade improved thanks to more exports from industries such as chemicals and fertilizer, clothing and electronics, it said.

Import-dependent Egypt has been trying to curb a big trade deficit and boost domestic industries after a years-long hard currency shortage that has sapped its ability to purchase from abroad and has hit business activity.

Egypt has seen its exports grow and imports tumble since it floated its currency in November 2016, roughly halving it in value overnight. Its goods have become more competitive on international markets while Egyptians’ purchasing power for foreign goods has fallen.

Economic reforms

The latest review by the International Monetary Fund has found that Egypt’s economic reforms are on track, paving the way for the transfer of another $2 billion loan disbursement, part of a three-year, $12-billion bailout loan to support the country’s battered economy.

The IMF said the transfer would bring the total payout to Egypt since it secured the loan in November 2016 to $6.08 billion. Egypt expects the payment to be made by January.

“Egypt’s reform programme is yielding encouraging results. The economy is showing welcome signs of stabilization,” the Washington-based lender said in a statemen. It hailed the country’s recovering Gross Domestic Product (GDP) growth, the moderation of inflation and an increase in foreign reserves to more than $36 billion, their highest level since 2011. The IMF announced the completion of the review on Wednesday.

Egypt’s inflation rate declined to 25.98 per cent in November, the central bank announced earlier this month, down from 30.82 in October. President Abdel-Fattah Al Sissi said in September that the government is targeting an inflation rate of 13 per cent by the end of 2018.

The government last summer raised electricity charges by more than 40 per cent and hiked gasoline prices by up to 55 per cent while doubling the price of gas canisters used for cooking. The hikes were part of the reforms introduced so the country can be eligible for the International Monetary Fund’s loan.

Economic reforms, mostly reduction in state subsidies on basic commodities, started shortly after Al Sissi took office in 2014 but they were accelerated last year.

Among other measures taken to vitalise the economy are the introduction of value added tax, or VAT, and the floatation of the currency that led to the Egyptian pound’s loss of half its value and triggering a significant hike in prices.

Agencies

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