• Egypt is making good progress on economic reforms in the context of an IMF-supported program. This is reflected in higher growth, reduced deficits, a reformed exchange regime and higher reserves.
• Egypt is also making headway on the more pressing and long-debated structural reforms of fuel subsidies and is-sues related to the business environment, thereby improving the immediate outlook.
• However, to sustain the progress and to lift the growth trajectory durably over the long term, deeper and more fundamental reforms are urgently needed.
• Prolonged neglect of deep-rooted structural distortions has impeded Egypt’s ability to match its more successful EM peers in raising its standard of living and in reaping the full benefits of globalization.

• While the current policy of incremental reform could continue to produce marginal, albeit often impermanent improvements, the urgent need is for a serious re-consideration of the country’s growth model and its state-led development strategy.
• The approach needs to transform the role of the private sector to become the leading engine of growth while reducing the dominance of the state in the functioning of markets and in direct economic activity. The state should focus on securing a healthy business environment for sustainable and inclusive growth.

• Finally, the reform program needs to phase out, gradually and, hopefully, non-disruptively, the role of the military in economic policy setting and in all commercial activity that is extraneous to its core mission.