Egypt expects private investment to take the lead in driving economic growth in the current fiscal year, says the planning minister, suggesting that investor confidence has rallied enough to supplant what has so far been an overwhelming reliance on state spending.
Private investment was expected to contribute 60% of economic growth in the current fiscal year ending in June, compared with 48% in the previous year, Hala al-Saeed said in an interview in Cairo.
The figure was expected to rise to between 62% and 65% in the coming fiscal year, she said.
The remarks reflect new confidence in sweeping reforms launched in November 2016 with the floating of the pound and subsidy cuts — measures aimed at kick-starting an economy that had struggled since the 2011 ouster of President Hosni Mubarak.
The flotation of the currency helped to secure a $12bn IMF loan and ended a dollar shortage that had crippled business activity. In a region burdened with political strife, Egypt represented a “safe haven”, al-Saeed said. “The economy is responding well to the government’s reform plan.”
The economy grew 5.2% in July to September with investments, rather than consumption, driving the growth.
While the IMF loan helped to restore investor confidence, with foreigners pumping more than $19bn into the local debt market, foreign direct investment has been slow to come.
Foreign direct investment fell about 16%, to about $1.6bn, in the July to September period compared with a year earlier. Inflation that had spiked on the back of the pound’s flotation to almost 35% decelerated to 21.9% in December. In addition, the economy is forecast to grow by about 5.5% this fiscal year — the highest level in about nine years, she said.
Bloomberg