Egypt needs to offer more than 700K jobs to cut unemployment

CAIRO – 4 April 2018: Egypt needs to provide 700,000 job opportunities to limit the increase of the unemployment rate, and this number should be exceeded to reduce the unemployment rate, according to Minister of Planning’s Advisor Ahmed Kamali.

Egypt is dealing with this problem through short term policies and initiatives of the Central Bank to encourage entrepreneurship, while the long term policies are to improve the education and health situation of citizens, Kamali told Youm7.

In the same context, IMF Egypt Mission Chief Subir Lall said that Egypt has to offer 700,000 job opportunities annually, noting that this number has to be led by the private sector, in light of the large population growth and the large number of youths.

He added that the private sector alone can provide these opportunities through the establishment of small and medium enterprises, and the expansion of existing companies where it is difficult for the public sector to step in.

According to the Central Agency for Public Mobilization and Statistics (CAPMAS), the unemployment rates in Egypt slipped to 11.3 percent in the fourth quarter of 2017, compared to 12.4 percent in the same quarter of 2016.

Planning Minister Hala al-Saeed said in March that the construction sector has helped in providing around 3.7 million jobs, representing 20 percent of total workers in the domestic market.

This data matched with what President Abdel Fatah al-Sisi had earlier stated about reducing the rate to 10 percent during the few upcoming years.

Decreasing the unemployment rates requires higher levels of economic growth. Egypt witnessed a growth rate of 5.3 percent in the second quarter of fiscal year 2017/2018, targeting to achieve a rate of 5.8 percent during the next fiscal year, and seven percent in 2022.

The upcoming budget seeks to lower the unemployment rate to 10.4 percent with an inflation rate of 13 percent.

The annual inflation decreased to 14.4 percent in February, down from 17.1 percent in January.

Egypt had embarked on a bold economic reform program that included the introduction of taxes, such as the value-added tax (VAT) and cutting energy subsidies, all with the aim of trimming the budget deficit.

The country floated its currency in November 2016 before it clinched a $12 billion loan from the International Monetary Fund (IMF). The IMF Executive Board approved in November 2016 a three-year Extended Fund Facility (EFT) loan to Egypt worth $12 billion to support its economic reform program.

In December 2017, Cairo received the third $2 billion tranche of its loan, bringing total disbursements to $6.08 billion.

The $2 billion fourth tranche will be received by Cairo after concluding the program’s third review in June.

Continuing the reforms decisions, the Monetary Policy Committee of the Central Bank of Egypt lowered the interest rates for the second time this year by one percent on Thursday March 29.

The committee set the overnight rate, and the overnight lending rate, at 16.75 percent and 17.75 percent, respectively.

In February, the committee lowered the interest rates by one percent for the first time since the flotation of the Egyptian currency in November 2016, after inflation rates slowed down.