Egyptian government projections of the country's economy sustaining a 6 percent growth level are overly optimistic, according to a report by the US embassy in Cairo received by AFP Monday.
The Economic Trends Report, a midyear report, argued that despite its commitment to economic reform "the Government of Egypt remains optimistic in its projection of GDP (Gross Domestic Product) growth, anticipating around 6 percent for fiscal year 1999-2000".
GDP growth rate reached 6 percent during 1998-99 and 5.7 percent the previous year. Businessmen, investors and analysts see the Egyptian economy "as in grip of a downturn", the report says, adding that it is due to many factors such as "foreign exchange shortages, slow export growth, high inventory levels, and trade disruptive government policies".
Referring to the Egyptian leadership's rejection of "devaluation" for the Egyptian pound, the report says that despite a significant draw on Egypt's international reserves, "intermittent local shortages of foreign currency continue to affect the banking sector and their business clients".
However, as the tourism sector has grown by 43 percent in the first two quarters of the 1999-2000 financial year compared with the previous year, the government expects the foreign exchange receipts to expand, the deficits in trade and in current accounts to decrease and accordingly improve Egypt's monetary situation.
© Agence France Presse 2000
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