Arab Republic of Egypt

The launch of Egypt’s reform program was a reversal from past policies, which had led to a buildup of large external and fiscal imbalances. With the liberalization of the foreign exchange (FX) market, the parallel market was eliminated and FX shortages virtually disappeared. The ongoing fuel subsidy reform, wage restraint, and significant revenue gains from the new value-added tax (VAT) underpin fiscal consolidation, which is critical for debt sustainability. Structural reforms to revive growth and employment are progressing well. The reform program received strong approval from the business community, international development partners and foreign investors.