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  • Thursday, 18 April 2024

During the conference “Rethinking Economic Policy: Steering Structural Change” organized by the Peterson Institute for International Economics (PIIE) and the International Monetary Fund Dr. Rania Al-Mashat, Minister of International Cooperation, presents national efforts to promote structural reforms and support macroeconomic stability policies

● Al-Mashat: Structural reforms support the steadfastness and resilience of the macroeconomy in the long term and reduce the risks of exposure to future shocks.

● The government is implementing a number of measures that enhance the empowerment of the private sector and increase its participation in development.

Dr. Rania Al-Mashat, Minister of International Cooperation and Governor of Egypt at the World Bank Group, participated in the conference “Rethinking Economic Policy: Steering Structural Change,” which was organized by the Peterson Institute for International Economics (PIIE), one of the most prominent research centers in the United States of America, in cooperation with the International Monetary Fund (IMF). The conference addressed the economic conditions at the present time in which the world is witnessing multiple crises, and the experiences of countries in implementing policies to enhance macroeconomic stability and structural reforms.

The conference was kickstarted by President of PIIE Adam S. Posen and the IMF Managing Director Kristalina Georgieva. Al-Mashat also participated in the practitioners panel session alongside Professor of International Economics at the University of Indonesia and member of the Advisory Board of the PIIE Mari Elka Pangestu, Former Swedish Minister Cecilia Malmström and PIIE official, and US Economic Advisor from the Office of the US President Heather Boushey. The conference witnessed expanded participation from academics, researchers, and representatives of governments and international institutions. The conference is scheduled to publish a book with contributions from speakers on economic and structural reform policies and the experiences of different countries.

In her speech, Al-Mashat stressed that at a time when the world is witnessing successive and intertwined crises, it has become necessary to achieve structural change and reform in economic policies, especially for developing countries and emerging economies, and to redraw priorities, explaining that structural reforms and macroeconomic stability are mutually reinforcing strategies to drive growth and achieve stability.

In her presentation, the Minister indicated that economic stability policies address short-term imbalances, while structural reforms ensure support for the steadfastness and resilience of the economy and lay a foundation for long-term stability, which reduces the economy’s exposure to external shocks and helps mitigate imbalances.

External Shocks

Al-Mashat pointed out that external shocks prevent the sustainability of structural reforms in developing countries, which causes the gap between developed and developing economies to widen, and requires accelerating reforms to put the economy back on track. H.E. explained that industrial policies are a key element in structural reforms, as they work to achieve supporting economic competitiveness, but it also requires supportive financial policies to achieve the desired results and transition to a green and digital economy.

The Minister noted that at a time when developing and emerging economies face an increasing need to accelerate structural reforms, industrial policies are of great importance by increasing investments in sustainable and clean infrastructure to drive the transition to a more urban economy, create job opportunities and stimulate innovation.

Green Transformation

Al-Mashat also stressed that in light of global calls for a green transition in global trade and the creation of sustainable value chains, investment in clean technologies must be enhanced as it is crucial to maintaining the competitiveness of the economy.

In this regard, H.E. stressed the Egyptian state’s commitment to implementing the 2030 Sustainable Development Goals, fulfilling its obligations in the Paris Climate Agreement, in line with Egypt’s Vision 2030 and the National Climate Change Strategy, and following an enabling environment to enhance the sustainable economic path, adding that the government is working to gradually integrate environmental sustainability standards. Within projects, Egypt plans to increase the percentage of green projects in public investments to the level of 50% during the fiscal year 2024/2025. The government has also begun developing a new strategy for industry to encourage economic growth led by the private sector in cooperation with the World Bank Group, one of Egypt’s most prominent development partners.

In the same context, the Minister of International Cooperation reviewed the country platform of the “NWFE” program, the nexus of water, food and energy projects, through which Egypt aims to mobilize climate financing based on a list of ambitious projects in the areas of mitigation, adaptation and resilience, in a way that accelerates the national agenda for climate action and mobilizes sector investments,private financing, concessional financing, and innovative tools to support the transition to a green economy. This is in partnership with many development partners, including the European Bank for Reconstruction and Development (EBRD), the World Bank, the African Development Bank (AfDB), the International Fund for Agricultural Development (IFAD), and the European Investment Bank (EIB).

Structural Reforms and Macroeconomic Stabilization Policies in Egypt

The Minister spoke about the measures taken by the Egyptian government to enhance macroeconomic stability and structural reforms through a number of measures, including controlling public financial conditions, increasing local revenues, enhancing transparency in the management of state-owned companies, and adopting a flexible exchange rate system, in addition to pursuING a clear strategy to increase social spending and meet the immediate needs of the lowest-income groups that could be negatively affected by the reforms being implemented.

H.E. stated that in this context, the government sought, in parallel with recent reforms, to support low- and middle-income families that were affected by high levels of inflation and the effects resulting from economic reforms, by expanding the scope of the Takaful and Karama cash transfer program in 2023, and adopting a social protection package under the directives of H.E. President Abdel Fattah Al-Sisi, worth EGP 180 billion.

The Minister pointed to the structural reforms that have enhanced competitiveness in the renewable energy sector since 2014, to meet the growing demand for energy, which contributed to increasing the projects implemented in the sector and encouraging more private sector companies and foreign investors to contribute to these projects and improving the infrastructure. Infrastructure in the renewable energy sector and driving the green transition.

Empowering the Private Sector

The Minister stressed Egypt’s focus at this time on enhancing the participation of the private sector as it is a pivotal element in supporting comprehensive and sustainable growth through a number of pillars, mechanisms and procedures that the sovereign fund is working on, and setting clear standards through the state ownership policy document to increase the percentage of private sector participation in the Egyptian economy to 65% during the next two years. This is in addition to enhancing the efficiency of management of state-owned companies, enhancing levels of transparency and disclosure, and supporting competitive mechanisms with private sector companies.

The Minister also stated that Egypt is working to move forward to adopt policies that stimulate economic growth and focus on the highest value sectors such as industry, agriculture, communications, and information technology.

To download the presentation "Rethinking Economic Policy: Steering Structural Change", click here.