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Billions expected to flow into Egypt after New Suez Canal opening: Analysts - Daily News Egypt

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Billions expected to flow into Egypt after New Suez Canal opening: Analysts

Canal income to increase to approximately $13bn annually, over $100bn expected income of canal projects

Analysts and financial bank experts expect billions of dollars to flow into Egypt after the New Suez Canal’s inauguration and the implementing of development projects to be established around the canal.

Haitham Abdel Fattah, General Director of the Treasury of the Industrial Development and Workers Bank of Egypt, said the Suez Canal Axis’ development is expected to achieve $100bn annually in seven years from its implementation. Ship manufacturing is expected to participate in the project’s annual income by 40%, with approximately $40bn annually.

Abdel Fattah said the digging of the New Suez Canal axis and the deepening of the old one will raise the canal’s revenues to $13bn annually. However, this will take place over several years, and not in the near future.

“National projects participate directly and indirectly in increasing foreign currency resources, thus it affects the national currency exchange rate against other currencies,” said Tamer Youssef, Head of the Treasury and Stock Markets Sector at a foreign bank operating in the Egyptian market.

Youssef clarified that all the state’s infrastructure’s projects, including energy, communications and road networks, indirectly affect the state’s foreign currency resources. These projects will attract and increase the size of the foreign direct investments (FDIs) in Egypt, thus it will increase the foreign exchange resources.

Youssef confirmed that national projects, such as the New Suez Canal Project, will directly increase the foreign exchange resources in Egypt, over the long- and medium-terms. In order for this to happen, the world trade movement should recover and the number of ships passing through the canal should increase.

He added that the Suez Canal area development project is even more important. This is not only because the project has a direct and quick input to increase the country’s foreign currency reserves, but it is also considered a model for sustainable development.

Youssef believes the increase of the country’s foreign currency resources, which will increase the country’s cash reserves, will not only stabilise the Egyptian pound’s exchange rate against the US dollar, but it will also improve Egypt’s credit evaluation; a step towards increasing FDIs.

Dalia Wahbah, Deputy Manager of the Treasury Sector at the Arab Investment Bank (AIB), expects the New Suez Canal Project to positively affect the foreign currency resources for Egypt. It will therefore positively affect the foreign cash reserves at the Central Bank of Egypt (CBE).

Wahbah added that the investment projects’ effect, expected over the coming years, on Egypt’s foreign exchange resources, will be more powerful.

Regarding the value of the Egyptian pound against the dollar and other foreign currencies, Wahbah concluded that in the short term, it would not be positively affected. To improve the pound’s position against these currencies requires some time, she added.

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