CAIRO - 15 May 2022: Egypt hold a press conference on Sunday to present the government's plan to mitigate the impact of the global economic crisis, and attract local and foreign investments.
This conference came as a result of implementing President Sisi's directives, especially since the crisis is expected to last longer than expected, according to Prime Minister Mostafa Madbouli.
Madbouli stated durign the press conference that among the state's measures is strengthening the role of the private sector, localizing the local industry, stimulating the Egyptian Stock Exchange (EGX), and providing commodities.
The current global economic crisis is the worst that the world is going through, Madbouli noted, clarifying that the global losses are estimated at $12 trillion so far.
According to the Prime Minister, foreign direct investments due to the global economic crisis as a result of the Russian-Ukrainian crisis have declined, and that public debt worldwide is exacerbating and increasing by 351 percent.
The current crisis led to the exit of hot investment funds from Egypt, Madbouli noted.
He clarified that $20 billion indirect foreign investments have exited the Egyptian market since the beginning of 2022.
“60 percentof the world's poorest countries have debts in critical condition, and inflation has reached 9 percentworldwide,” Egypt's Prime Minister said.
He also reviewed that many countries have started to increase interest rates, and the International Monetary Fund (IMF) has lowered its expectations for growth rates for 143 countries.
"I challenge any global expert who can predict how the global economy will be within a year," Madbouli stated.
Had it not been for the economic reform program and the unprecedented rates of growth rate, Egypt would not have been able to withstand these crises, Madbouli pointed.
Egypt’s exports and impact of the crisis on the state
Madbouli stated that Egypt achieved the highest rate of exports in its history in 2021, and there is an unprecedented increase in the Suez Canal revenues.
He added that Egypt's exports were increased, and the tourism movement was restored by $5.8 billion in the first half of the last fiscal year 2020/2021.
The Primer said that the direct impact of the Russian-Ukrainian crisis on Egypt in the coming period reaches LE 130 billion, as a result of the increase in commodity prices and the indirect effect would reach LE 335 billion.
Madbouli thanked a number of brotherly Arab countries who contributed to pumping sums of money to maintain the monetary stability of foreign currency in Egypt.
“Egypt's population is expected to reach 120 million people in 2030, which is equivalent to 15 European countries,” Madbouli said.
Furthermore, Madbouli said that a third of public investments were directed to national projects.
Continuing the review of the achievement Egypt achieved during the last period, Egypt has become No. 1 in the African continent in terms of internet service.
“Without the road network that was established, Egypt would have become a large garage in which the speed of cars will not exceed 8 km per hour,” Madbouli said.
He added that the new cities that are being established are for future generations, and that the national projects have provided five million job opportunities.
Regarding the participation of the private sector, the state will announce a program for the participation of the private sector in state-owned assets, Madbouli said, noting that the government aims to raise private sector participation by 65 percentover the next three years.
He also added that the state aims to make available state-owned assets worth $40 billion for partnership with the Egyptian or foreign private sector for a period of four years.
On another note, the Prime Minister stated that the government will announce the State Property Policies Document before the end of May, adding that they are studying the establishment of a national authority for intellectual property.
The government reviewed the vision of the achievements of the Egyptian industry, and it will be followed up every 3 months with the achievements made, Madbouli referred.
“Egypt will turn to a system of usufruct in industrial lands without restrictions and pricing will be based on the value of the facilities and in installments,” the PM noted.
According to the Prime Minister, Egypt is one of the countries nominated to be a major center for green hydrogen and ammonia.
A new law will be launched to exempt industrial projects in new and border cities from tax exemptions, the PM noted.
“During the past 4 years, 51,000 industrial operating licenses were issued, which provided 2.5 million job opportunities,” Madbouli stated.
Egypt’s economic indicators
As for the economic indicators, Egypt's external debt hit 91 percent including medium and long-term debts and does not represent pressure on the state, Madbouli announced.
He said that Egypt aims to reduce the public debt from 86 percent to 75 percent over a period of 4 years until 2026.
Upon the initial offering program (IPO), Madbouli said that a number of public sector companies will be listed on the stock exchange, including 10 public sector companies and two armed forces companies.
Moreover, he stated that the largest 7 ports will be merged under the umbrella of one company, Madbouli stated, adding that 7 hotels will also be merged under the umbrella of one company to be both put on the financial markets.
Regarding wheat production, It is expected that 10 million tons of wheat will be produced for the first time in 2022.
“Egypt's strategic commodity reserves are sufficient for 4 months, and the oil reserves are sufficient for up to 6 months,” the PM added.
Negotiations with the IMF
The Primer stated that negotiations with the International Monetary Fund are moving in good steps, and within a few months the program will be under implementation, with expectation that the official visits of the IMF delegation to start.
The International Monetary Fund's assessment for Egypt is positive, Deputy Finance Minister Ahmed Kojak said during the press conference.
Egypt’s new program with the International Monetary Fund (IMF) targets supporting the structural reforms that boost the national economy without placing any burdens on citizens, Finance Minister Mohamed Maait said previously.
Maait hoped for continued support of the IMF to the Egyptian economy to help the country face the current unprecedented economic crisis that caused a sharp rise in price of raw materials as well as the repercussions of the Ukrainian-Russian conflict that threaten world food supply chains.
Interest Rates and Sukuk issuance
As for interest rates, Madboui said that they are expected to increase in light of the high inflation. However, the CBE is the one responsible for the size of the increase and its timing.
He pointed out that the first Islamic sukuk will be issued in the next few months, after the Cabinet approved the executive regulations for the relevant law.
On the Grand Ethiopian Renaissance Dam (GERD), the Prime Minister stated that Water is the main determinant of increasing the agricultural area.
“Egypt has clear historical rights to the Nile waters, and helps in huge development projects for the Nile Basin countries, but the state will not dismiss any infringement of our rights in the Nile waters,” he stated.
"Egypt will import wheat from different markets including Australia, France and Kazakhstan," Minister of Supply Ali Moselhi stated, noting that no need to import wheat from these markets during current period as the reserve is sufficient.
Moselhi added that Egypt refused to enter a shipment of wheat that did not have any documents or government papers from the Russian government.
For her part, Minister of Planning, Hala El-Said said that the government is working to establish an appropriate minimum wage for the private sector.
"2022 will witness an appropriate periodic bonus for the private sector," El-Said stated.
For the first time in the history of the Egyptian government, a minimum wage was set in the private sector, at LE 2,400, and there will be an increase by the end of 2022, according to El-Said.