Egypt finance minister Amr El Garhy said that the intention to tap debt market again is based on the growing confidence of investors in Egypt economy.
El Garhy who was speaking on the sideline of Euro Money Conference kicked on Tuesday in the Egyptian capital Cairo.
When the finance minister was asked about the funding gap for the current fiscal year, he said
that Egypt funding gap is expected to hit USD 10-12 billion in the current and next fiscal.
According to El Garhy investment in Egypt debt pile is expected to hit USD 20 billion by the end of the current fiscal year.
“Foreign investment in Egyptian debt is expected to stand at USD 20 billion. They inject more cash as they are confident about the future. This is an important evident that we are restoring their confidence after years of turmoil,” El Garhy added.
The governor of the Central Bank of Egypt (CBE), Tarek Amer, said that the volume of foreign investment in Egypt’s debt instruments rose to $15 billion since the liberalization of the exchange rate.
Foreign currency inflows into Egypt’s debt and equity market have already been steadily growing since the central bank removed restrictions on the currency and raised interest rates in November before securing a $12 billion loan from the International Monetary Fund.
“We are getting more intention from investors. I expect an up tick also in the foreign direct investment in the few coming months,” El Garhy added.
Investors have poured money into Egyptian debt and equities since authorities started overhauling the economy by removing most currency restrictions, raising interest rates and cutting fuel subsidies.
Foreign reserves surged to more than $36 billion in August, a record, with the debt market attracting over $15 billion in foreign inflows.
El Garhy seemed to be confident about a downward trend for the inflation in the few coming months.
“Inflation has started its downward trajectory. Prices will continue to go down and citizens to feel that soon,” El Garhy said.
Egypt’s key inflation indicators dropped in August from the multi-decade highs they reached in July, when energy prices were raised as part of International Monetary Fund-backed reforms.
Annual urban consumer price inflation dipped to 31.9% year-on-year in August from 33.0% in July, the official CAPMAS statistics agency said.
Core inflation, which strips out volatile items like food, decreased to 34.86 percent from 35.26 percent, according to the central bank.
“I think headline inflation will hover around 15% by the end of the current fiscal year,” El Garhy confirmed.
Inflation soared in July to its highest since 1986 after the government cut fuel and energy subsidies.
When El Garhy was asked about the timing of cutting fuel subsidy again, he said,”at the current stage, for the current fiscal year there will be no hikes in fuel prices”.
He noted out that the oil prices in global market enabled the government to sustain the current prices.
Fuel subsidy cuts were a condition of a $12 billion, three-year loan program agreed last November with the IMF, which included subsidy cuts, tax increases and looser capital controls