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International reports express confidence in Egyptian economy - Daily News Egypt

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International reports express confidence in Egyptian economy

CAIRO: JP Morgan has issued a report on Egypt’s latest economic developments and performance, with foreign direct investments (FDI) being one of the biggest, reoccurring features in the report. According to the global financial services firm, the government has taken several important steps toward improving the investment climate in Egypt. The report cites the increase …


CAIRO: JP Morgan has issued a report on Egypt’s latest economic developments and performance, with foreign direct investments (FDI) being one of the biggest, reoccurring features in the report.

According to the global financial services firm, the government has taken several important steps toward improving the investment climate in Egypt. The report cites the increase in FDIs in the country over the last few years as evidence, with an increase from $1 billion dollars in the 2004-2004 fiscal year, reaching $3.3 billion in the first half of this fiscal year.

The report also stated that FDIs are expected to continue their climb to reach $5 billion by the end of this year through the government’s asset management program, working toward aiding the growth of various frontline industries in Egypt, especially in the tourism and petroleum sectors.

The latest report on Egypt s economic performance indicators shows positive surpluses in the last period, which the firm attributed to growing local and international confidence in Egypt’s economic developments. The report cites the offering of the Bank of Alexandria, the fourth largest public commercial bank. The bank received offers from 13 institutions, which the report states as evidence of the confidence the business and financial sector have in the economic reforms made in the country.

Despite the poor performance of the Egyptian stock market of late, the report stated that the changes in its performance are temporary as investments in the country continue to grow.

The World Bank rated Egypt sixth in the world for progressing economic reforms implementation. The FDI agreements hatched in the country are one of the most important reasons for the developments that Egypt has witnessed in its investment climate. The report predicts an increase in the country’s rate of GDP to reach 6 percent this fiscal year with expectations that it will rise between 6.5 to 6.9 percent in the 2006-2007 fiscal year.

The economic reforms made in the country were also discussed at great length. According to the report, a rise in the GDP rate is expected due to the government s economic reforms, the applied financial policy and improved domestic credit for the private sector, in addition to the flow of foreign investments, which will lead to increased liquidity for the private sector.

The developments in the banking sector were also discussed, particularly the bank restructuring program, which aims at supporting existing banks in Egypt and increasing the sector’s ability to offer credit and deal with market risks.

The exportation of natural gas in Egypt is expected to increase, according to the report.

In regard to the tourism sector, the report states that an increase in FDI is expected due to an increase in sales and capital available from many Arab economies, and an increasing number of Arab investments in the sector resulting from the liquidity in these economies. According to the report, revenues from tourism are expected to reach $7.2 billion in 2006, compared to $6.4 billion in 2005. The number of tourists visiting Egypt is also expected to grow, going from 8.5 million to 9.6 million this year.

Many international financial institutions have expressed interest, recently issuing reports on the development of the Egyptian economy.

A report by HSBC was issued on May 19, while Standard Chartered Bank reported in mid May and Fitch reported on May 17.

According to the HSBC report, net foreign investments, particularly Gulf investments in the tourism, financial services and mortgage sectors, rose by five percent. Foreign reserves also rose, reaching $23 billion in the Egyptian Central Bank, which led to investment flows and foreign support for the Egyptian economy.

Standard Chartered Bank also stated that the increase in FDI stemmed from international and local confidence in the Egyptian government s reforms; the Asset Management Program; offerings in the banking sector; the new strategy adopted in the industry sector and investment incentives in the qualified industrial zones. The report by the bank also showed an increase in tax revenues despite tax reductions, which spurred economic growth.

Moody’s Investors Service has also given Egypt a higher credit rating, from Ba1 to Baa2. Moody’s has upgraded its long-term non-sovereign foreign currency rating for Egypt with a stable outlook, in light of a new approach that resulted in upgrades for 70 countries.

The risks of the Egyptian private sector s foreign financing have also reportedly decreased. According to their evaluation, the Egyptian private sector will be able to raise financing in international markets more easily at lower cost.

Topics: FJP

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