In 2004 Egypt began to implement bold economic reforms, supported by its main donors and the International Finance Institutions (IFIs). The reforms, which included macroeconomic policies; financial sector reform; privatisation and structural reforms in trade, taxes and subsides, contributed to a rapid acceleration of growth, making it one of the Middle East and North Africa’s fastest-growing economies. This economic growth, however, did not result in inclusive growth. Unemployment remained high among particular groups, poverty increased from 16.7% to 22%, and there were also disparities between different regions.
A number of reasons are put forward for the reform programmes’ failure to deliver inclusive growth:
- problems within the labour market, particularly persistent unemployment
- lack of democratic space
- insufficient attention to dynamic sectors.
Possible measures for redressing the imbalance include:
- shifting resources out of subsidies
- expand the economic reform programme to include programmes that aimed at translating the recent strong macroeconomic performance into improved living conditions for those below and around the poverty line
- political reform, good governance, and socio-economic development
- the creation of jobs that would absorb Egypt’s growing labour force
- address constraints on small businesses.