Egypt’s central bank on Tuesday affirmed its inflation forecast of 13 percent in the fourth quarter of the year after the temporary effect of fiscal supply shocks dissipates.
“As the recently implemented fiscal consolidation measures were anticipated, the MPC decided in its recent meetings that existing policy rates remain appropriate to align the inflation outlook with the targeted disinflation path announced in May 2017.” the central bank said in its latest monetary policy report.
Egypt’s real GDP is expected to continue benefiting from structural reform measures, while potential fiscal consolidation measures may temporarily slowdown the recovery of private consumption, the report showed.
Net exports and investments are expected to continue complementing consumption as growth engines, it added.
The overall fiscal deficit is budgeted to decline to 8.4 percent of GDP in the financial year 2018/19, compared to an expected 9.8 percent in 2017/18 and 10.9 percent in 2016/17, and is targeted to continue declining thereafter.
“Meanwhile, the primary fiscal balance is budgeted to record a surplus of 2.0 percent of GDP in 2018/19, compared to an estimated surplus of 0.2 percent of GDP in 2017/18 and a deficit of 1.8 percent of GDP in 2016/17, with the aim of maintaining this surplus thereafter.” the report read.