Inflation in Egypt will slow to single digits within the next two or three years, once a reform agenda has been implemented, Finance Minister Hany Dimian said on Monday.
Egypt has been battling rising inflation since the government slashed subsidies in July, raising prices of gasoline, diesel and natural gas by as much as 78 percent.
According to the most recent data, Egypt’s annual urban consumer inflation slowed to 11 percent in April from 11.5 percent in March.
Dimian said he expected inflation to fall back below 10 percent once reforms had been tackled.
“I would expect that in two to three years’ time,” Dimian said on the sidelines of a conference in London.
“That will depend on the packaging of the reforms that we are undertaking or have to undertake, improvement in the efficiency in addition to resolving of the historically outstanding supply bottlenecks which induce an element of rigidity in inflation.”
Egypt’s economic growth has begun to pick up and shaky state finances to strengthen since President Abdel Fattah al-Sisi took office in 2014, overseeing the installation of a technocratic cabinet that is starting to reform the economy while forging an alliance with rich Gulf states to obtain aid and investment.
One part of the reform agenda has been to overhaul the tax and subsidies system. Dimian said the government would finalise details of a value-added tax system over the coming days.
“We are working towards shifting to a fully fledged value-added tax system and we have different scenarios on that.”
Dimian said it was too early to say when Egypt could come back to tap international investors after raising $1.5 billion on Thursday.
“The main purpose of issuing the bonds is to build the yield curve and the benchmark,” he said.
Last week’s sale was Egypt’s first issue in five years since Cairo was effectively frozen out of the debt market during the Arab Spring uprising in 2011.
Egypt sold the 10-year bonds at a yield of 6 percent and drew more than $4.5 billion of investor orders, according to a document from lead managers.
Source: Reuters
