In a bid to encourage foreign investment in Egypt, Egyptian Finance Minister Samir Radwan brought an important message to US businesses at the Chamber of Commerce in Washington this week that, “Egypt is back to work”.
Radwan told US business leaders in Washington, “I want to reassure you that we are doing something right. The political turmoil is subsiding, the country is back to work and we are planning for post-crisis management. We need to stimulate the economy, but what we really need is partners.”
Egypt’s interim government plans to focus on infrastructure, business development and “mega national projects” to spur growth and create jobs. One such “mega national project” is expected to create an economic corridor that would involve shifting 9 million people to the western part of the country creating an economic area akin to a Hong Kong in Egypt.
In addition to foreign investment, Egypt is also requesting debt forgiveness, including US forgiveness of $3.6 billion in debt.
Rising prices, corruption and unemployment in Egypt led to a revolution to bring down President Hosni Mubarak. However, the revolution and unstable political climate reduced Egypt’s tourism revenues in February by more than half, and led to an increase in Egypt’s budget deficit which is expected to hit $8 billion by June 30, the end of the country’s fiscal year.
The International Monetary Fund lowered Egypt’s previous estimate of economic growth from 5% to 1%, and Moody’s Investor Services downgraded Egypt’s rating from Ba3 to Ba2 sparking concerns of a counter-revolution if the new government proves unable to satisfy the people’s basic needs.
Fayza Mohamed Aboulnaga, the minister of planning and international cooperation emphasizes investors must act immediately to prevent additional insecurity and stability in the region.
For those with a longer horizon, HSBC recently produced a report suggesting Egypt will surpass Saudi Arabia as the region’s largest economy by 2050 and 19th largest economy in the world due to “demographic shifts, major improvements in emerging market infrastructure, education and spending patterns.” To do so, Egypt’s economy must grow at a rate of 4% for the next 40 years. Source: www.yallafinance.com.
