FDI to bolster over coming months: investment banks

CAIRO – 18 September 2017: The economic reform measures taken by the Egyptian government have contributed in boosting foreign direct investment by 25 percent since pound’s flotation, senior economist at CI Capital Hany Farahat said Monday.

In a Euromoney Egypt Conference panel about investments, Farahat said the flotation was also positive for the trade balance and the treasury bill market.

“I’m more worried now about the lacking of a national strategy, the government should be commune on whether to target investment growth or just re-pricing the cost of investment,” Farahat added.

Deputy managing director of Emirates NBD, Sahar El Damati, said that the economic reform measures were positive for both investment and banking sectors, “at least now we have no parallel market and we have one price for the U.S. dollar exchange rate,” she said.

Sealing a deal with the International Monetary Fund (IMF) has delivered a message of confidence in the economy to foreign investors, “the country business risk has gone down substantially,” she said.

“A lot of work has been done by several ministries to improve the investment climate, such as the industrial permits act, launching an investment council headed by the president of the country and boosting FDI levels,” Damati said.

On the supply side of U.S. dollar, the Central Bank of Egypt (CBE) has taken steps to decrease imports, Damati said, noting that the exports have risen on the other side.

“I want to stress that we are still in the first year after the flotation, exports have actually swelled more than expectations,” she said, adding that the monetary policy of the CBE has taken prudent efforts to decrease the exchange rate such as the China-Egypt currency swap deal.

Speaking about interest rates, Farahat noted that the CBE’s monetary policy committee is expected to keep the interest rates on hold in the next meeting, so the rate will be around 17-20 percent.
CEO of Middle East and North Africa of Renaissance Capital, Ahmed Badr, said the CBE’s decisions to raise the interest rates three consecutive times were necessary, “that was actually used to attract more investments,” he said.

On the effect of these measures on the inflation, co-head of Middle East and North Africa at Actis, Sherif El-Kholy, commented that the inflation was under control over the past 20 months.

“The reforms done were done in a very fast pace and the IMF provided much-needed confidence in the economy,” he said.