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IMF agreement to pave way for economic reform: CI Capital deputy CEO - Daily News Egypt

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IMF agreement to pave way for economic reform: CI Capital deputy CEO

Another devaluation of the Egyptian pound will be necessary to reflect its true value post-IMF deal

The International Monetary Fund (IMF) loan will pave the way for the reformation of Egypt’s economy—it’s not about the amount to be lent, but rather it’s about the reforms that the government will carry out in order to reduce the deficit. The first positive effect of the agreement is the implementation of the value-added tax (VAT), according to CI Capital deputy CEO Tarek Tantawy.

Moreover, the most eminent and very much belated step is cutting government expenditure by reducing subsidies, while gradually converting them into cash subsidies.

“There will have to be a devaluation of the Egyptian pound to reflect its true value post-IMF deal. CI Capital predicts the new value of the pound against the US dollar to be between EGP 11.5-12,” Tantawy said.

Adding that it will be a turning point towards growth, Tantawy explained that the way to improve the economy is by creating more jobs and by attracting more foreign direct investment. As an investments specialist, he believes that tourism and real estate are currently not the optimal sectors for investors.

From his point of view, investing in industrial sectors, services sectors such as medical care and education, and food sectors would be the best options, and would provide the best return on investment in the future.

Furthermore, when asked where he believes the foreign direct investment will be coming from, he explained that although the Gulf Cooperation Council (GCC) is facing challenges in the Gulf, they still have a lot of interest in Egypt.

Not only the GCC, but also European investors are interested for different reasons, particularly the negative interest rate in Europe which makes the Egyptian market an attractive option for European investors.

He added that previously, Egypt attracted energy-intensive industry investors, which took its toll on Egypt’s resources, so the country should try to attract more labour-intensive industries investors.

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