LONDON: The șÚÁÏÉçÇűn economy is in a âsweet spotâ, with higher oil prices allowing the Kingdom to boost spending while not having a significant impact on the countryâs fiscal balance, according to Bank of America Merrill Lynch Global Research.
âOur meetings on șÚÁÏÉçÇű comfort us in our view that the economy is in a sweet spot. Higher oil prices are allowing the focus on boosting activity not to materially impact fiscal balances,â the note said, published following the IMF and World Bank Spring meetings held in Washington DC this month.
âWith a more entrenched current account surplus possible this year, FX reserves could increase this year,â the note said.
The bank forecasts the country will continue to push forward with its reform process regardless of the rising price of oil. Many of șÚÁÏÉçÇűâs reforms are part of its Vision 2030 that aims to diversify the countryâs economy away from its reliance on oil.
Brent oil reached a three-and-a-half year high on 19 April, hitting $74.74 a barrel.
âReforms are likely to broadly proceed, even at these levels of oil prices, although spending may increase further above baseline expectations,â the note said.
The bank was also upbeat about Egyptâs economic prospects, noting that the countryâs âmacro stablizationâ is continuing and that its reform program, which includes cutting fuel subsidies and reforming the tax system, remains âintactâ.
âAuthorities are on track to achieve a small 0.2 percent of GDP primary surplus this fiscal year. The target is to bring the primary surplus to 2 percent of GDP next fiscal year, and maintain it there going forward,â it said.
