## Moment of Opportunity—Delivering on Egypt’s Aspirations by Christine Lagarde, IMF Managing Director

_IMF News, March 13, 2015_

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## Bibliographic details
- Authors: Christine Lagarde Managing Director
- Published: March 13, 2015

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### Context and framing
- Speech by Christine Lagarde, Managing Director, International Monetary Fund.
- Sharm Al-Sheikh, Egypt, March 13, 2015. As Prepared for Delivery.
- Central theme: seize a "moment of opportunity" to deliver stronger growth, better health and education, and higher living standards for Egyptians.

### 1. The reform process already underway
- Energy subsidy reform began in mid-2014; part of the savings used to finance a targeted cash transfer for poor families.
- Tax measures: increases in excises on tobacco and alcohol and plans for VAT.
  - Non-oil tax revenue is only at about 10 percent of GDP.
- Investment increases, including the Suez Canal project, financed mainly by ordinary members of Egyptian society.
- Emphasis on smaller projects and private investment (domestic and foreign) to complement public projects; investment requires confidence and policy certainty.

### 2. Policies to restore confidence—staying the course of reforms
- Primary prescription: stay the course on the reform agenda.
- Business environment:
  - Egypt ranks 119 out of 142 in the World Economic Forum’s Competitiveness Index.
  - Example frictions: it takes on average over 60 days to register property and over 1000 days to enforce a contract.
  - New investment law is an important step; further deregulation recommended to attract investment and create productive jobs.
- Trade and external sector:
  - Egypt’s non-oil exports were only 5 percent of GDP last year—identified as a "huge missed opportunity."
  - Exchange rate flexibility recommended to balance demand and supply of foreign currency and support growth and financial position.
- Financial sector:
  - Only 10 percent of Egyptians have a bank account.
  - Adoption of a micro-finance law could help develop the financial sector and extend credit to small job-creating businesses.
- Overall: business environment reform, trade liberalization, and a stronger financial sector can generate tangible increases in investment and growth, provided reforms are sustained.

### 3. Inclusive growth for sustainable growth
- Definition: growth that offers opportunity to all—women, youth, unemployed, disabled—and shares benefits widely.
- Youth and women:
  - Over the coming five years, there will be more than 600,000 new entrants to the labor market per year.
  - Today one in three young Egyptians below 25 years of age is unemployed—almost three times the overall unemployment rate.
  - Women’s labor force participation rate is 22 percent, compared with 73 percent for men.
  - Barriers include large wage gaps, high commuting costs, and inflexible work schedules.
- Social spending and human capital:
  - Calls for increasing and improving the quality of social spending—particularly education and health.
  - More efficient spending on health and education could support higher and more inclusive growth while preserving fiscal sustainability.
  - Better education can narrow wage gaps and improve private-sector female participation.
  - Improved public transport can enable safer commuting and job access for women.
- Linkages: integrating women and youth more effectively into the economy is both inclusive and good economic sense.

### Conclusion and IMF commitment
- Restoring economic stability, instilling confidence, and spurring jobs and growth require steadfast implementation of reforms.
- The IMF remains committed to helping Egypt achieve better living standards.
- Opening quote: Umm Kulthūm—“wa ma nay’lu al mata’alibi bettamanni” (aspirations cannot be attained through wishful thinking, but through toil and perseverance).
- Closing quote: Naguib Mahfouz—“You can tell whether a man is clever by his answers. You can tell whether a man is wise by his questions.”

*Christine Lagarde, "Moment of Opportunity—Delivering on Egypt’s Aspirations," Sharm Al-Sheikh, Egypt, March 13, 2015.*

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## References

- [Arab Republic of Egypt and the IMF](http://www.imf.org/external/country/EGY/index.htm)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [Christine Lagarde](https://www.imf.org/external/np/omd/bios/cl.htm)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp031315_