Bankers flag inflation as Egypt’s main challenge

CAIRO – 18 September 2017: The Egyptian government will face a challenge in reducing inflation rates to 15 percent by the end of the current fiscal year as per their estimates, country treasurer and head of markets at Attijariwafa Bank Mahmoud Bahaa said Monday.

Speaking at a panel discussion at the Euromoney Egypt Conference in Cairo which kicked off Monday, Bahaa said that the inflation rate will substantially decrease from November, “but it will still be difficult to reach that target,” he said.

CEO and managing director of state-owned investment bank NI Capital, Ashraf Ghazaly, said that despite being an ambitious target, it is reachable as the GDP growth is accelerating at a faster pace.

“The inflation rate will remain a challenge in front of the Egyptian government as the market is supply-led,” managing director of Middle East, Egypt and Pakistan at Citi, Andis Costopoulos said during the panel.

The interviewees also talked about the most needed reforms to bring the foreign direct investment (FDI) to higher levels. Ghazaly said that improving the business environment is the biggest challenge, “this can only be done if licenses were given at easier procedures on the ground, and the legislative reforms are implemented,” he said.

Sounding less ambitious, Costopoulos said that he was expecting a concrete state framework, “I’d like to see huge projects without the intervention of the government,” he said.

Bahaa, who is representing Egypt’s latest market addition in the banking sector [Attijariwafa], said that the whole global economy is slowing down now, affected by international changes in the political front.

“It is very difficult now to convince investors to enter a new market… even Gulf countries are now shifting from their oil-focused economy to diversify their revenues,” he said.

Bahaa said his bank has entered the Egyptian market because it has seen a growth potential in the country. Attijariwafa’s expansion to Egypt is considered the first step towards an expansionary plan across Africa.