Egypt wants to attract investors … Will the new stimulus plan succeed?

While the negative repercussions of the war in Ukraine have intensified on the Egyptian economy, the Egyptian government has unveiled a diversified stimulus package that meets the requirements of a flexible and positive fast-track transaction, and an economic recovery from the effects of the current world crisis.

Egyptian Finance Minister Mohamed Maait said his country’s government was working to curb the negative effects of the global crisis in its various branches, whether it be the unprecedented inflationary wave, the severe disruption in supply and supply chains, the increase in shipping costs, or the high prices of goods and services.

Maaait’s statements came during separate meetings with representatives of “Morgan Stanley Bank”, “Bank of America” ​​and “Bank of New York”, during his participation in the work of the “BEBA” trade mission in London.

The state leaves some assets

Maaait indicated that efforts to encourage investment and maximize local production are reflected in a package of tax and customs incentives and incentives that support the national industry. For example, the government is working to attract more investors interested in the production of electric cars through stimulus packages, while encouraging other vital sectors such as information technology, digitalisation and the textile industry.

He added that the government is improving infrastructure and accelerating the pace of growth by expanding private sector participation in economic activities, and the document “State Ownership Policy” strikes a balance between private and private sector participation. reach public sectors. in economic activity, as it includes the state’s exit from some activities to open the field and investments Before the private sector, whose contribution is aimed at increasing to 50 percent of GDP over the next three years.

He announced that the coming period would witness the listing of a number of state-owned companies and institutions on the stock exchange to attract more private sector investment. He pointed out that the volume of Egyptian exports of petroleum and non-oil goods during the past financial year amounted to about $ 43.6 billion, while the overpayments of Egyptians from abroad amounted to about $ 32.5 billion, and this is expected to well rise. rates by the end of this year.

Maait expected the Suez Canal’s revenue to be a remarkable increase, approaching $ 7 billion by the end of this year, compared to about £ 5.5 billion last year.

Positive debt and GDP targets

At the same time, Maait revealed that by the end of the current financial year, the government expects tourism revenue to be between $ 10 billion and $ 12 billion, despite the 35 percent loss of tourism due to the loss of party tourists. to the Ukrainian crisis, and points out that efforts are being made to compensate for this by attracting more tourists from other countries, including Germany, Britain and Italy, as tourism is a major source of hard currency.

He stressed that global financial institutions and international financial markets must reduce the cost of green financing to motivate countries to adapt to climate change.

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He pointed out that the Egyptian government aims to record an initial surplus of 132 billion Egyptian pounds ($ 7.24 billion) at 1.5 percent over the next financial year, despite the existing global challenges, and the total deficit to reduce to 6.1 percent of GDP, compared to up to a total deficit It was at 12.5% ​​at the end of June 2016, in addition to putting the debt rate on a sustainable downward path to less than 75 % of GDP over the next four years.

The Egyptian government aims to reduce the debt rate to 84 percent of GDP, compared to 1.3 percent at the end of June 2016, while reducing the debt service rate to 7.6 percent of GDP and 33.3 percent of budget expenditures, along with Efforts to diversify sources of financing to reduce the cost of development and extend the life of the debt.

Maait explained the goal of laying the foundations of a suitable environment for rapid economic recovery from the current global crisis, in order to ensure the completion of the process of construction and development and to improve the lives of citizens. The new budget concept has including the allocation of 376 billion. pounds ($ 20.625 billion) for public investment, with an annual growth rate of 9.6 percent. To improve services provided to citizens and create more jobs, especially for youth, while raising environmentally friendly projects to 50 percent.

The huge cost of the Russian war in Ukraine

A few days ago, the Egyptian government estimated the cost of the Russian war in Ukraine on its budget at 130 billion pounds ($ 7.13 billion). Prime Minister Mostafa Madbouly said it was clear that the economic crisis would last longer than expected, pointing out that his government would strengthen the role of the private sector, reduce debt rates, social protection measures and localize Egyptian industry.

He pointed out that “the current crisis has not occurred in more than 80 years, and the loss is estimated at $ 12 trillion, which is 5 times the GDP of the African continent and 4 times the European countries, and global financial institutions. has lowered expectations of global growth rates. ” He pointed out that these conditions affect the movement of production and world trade, and trade losses are estimated at about $ 300 billion. In light of these conditions, global debt rates have risen and 60 percent of the poorest countries are in a critical state.

Regarding price increases and inflation rates, the Egyptian Prime Minister referred to the unprecedented inflation worldwide, which reached 9 percent, and all these situations put great pressure on all countries, especially in developing countries. He said that at the commodity level, the cost of wheat on Egypt had increased, adding that Egypt’s strategic reserves of wheat for four months were sufficient, oil reserves for 5 or 6 months, and rice reserves sufficient for 7 or 8 months.

Regarding energy, the Egyptian Prime Minister said that his country “imports 100 million barrels a year, and the government has paid about $ 6.7 billion, but these numbers have risen to about $ 11.2 billion due to successive increases in oil and energy prices worldwide. “To strengthen the role of the private sector in economic development and increase the gross domestic product, the Egyptian Prime Minister unveiled a program for the private sector’s participation in state assets of about $ 40 billion within 4 years.

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