Dollar shortage deters investments, central bank determined to fix it: Egypt FinMin

Dollar shortage is one of the main obstacles that Egypt currently trying to overcome in order to allure more foreign investments in the coming period, Egyptian finance minister Amr al-Garhy said.

“Despite challenges, there is huge potential in Egypt due to its diversified economy” the minister stated.

Egypt’s central bank is adopting flexible and clever monetary policies to fix the foreign exchange market, in collaboration with the Egyptian Ministry of Finance, minister al-Garhy told the delegates of the American Chamber of Commerce’s Doorknock mission in Washington on Tuesday.

However, the central bank still enjoys full independence in taking all the decisions related to the county’s monetary policies such as the exchange rate prices and interest rates, he added.

The decision taken by the central bank to devalue the Egyptian pound against the dollar will contribute to attract more investments to the Egyptian market, the finance minister asserted.

Minister al-Garhy met Tuesday with the delegates of the AmCham-Egypt’s doorknock mission in Washington.

A delegation of around 40 top-level executives representing businesses in Egypt has started Sunday their visit to Washington, D.C. for the American Chamber of Commerce in Egypt’s (AmCham) Annual 39th Doorknock Mission. The visit will be from April 17-22.

Close liaison

There is a close liaison between all the economic ministries concerned with finding methods to overcome the ongoing challenges the country faces, notably the large budget deficit, growing debt, and unemployment rates, minister al-Garhy stated.

The Egyptian government is determined to implement an ambitious scheme to improve the country’s economic indicators.

Al- Garhy further said that during his participation in the annual spring meetings of the International Monetary Fund and World Bank, the international financial institutions had showed their confidence in the Egyptian government’s ability to face economic challenges.

The government is taking measures to support the national economy by “working on reducing highly unproductive importations to support local industries.”

This will fix the country’s balance of payments and ease pressure on the foreign currency.

Ministry of Finance is currently in the process of drawing a new tax policy that would achieve in return social justice yet it would not hurt low-income and elderly citizens, minister al-Garhy noted. The current government has ambitious policies to trigger growth and investment levels as well as boost employment rates.

The government is “focusing on economic and social justice programmes, food subsidy, social pension and ‘dignity and solidarity’ programmes.” He added.

Dispute settlements

Meanwhile, Minister al-Garhy referred to the government’s plan to settle soon all disputes between investors and taxpayers in order to boost the tax returns in the coming period. Therefore, tax returns shall increase to record 50-60 billion Egyptian pounds.

The government targets a 9 percent budget deficit and a 5-5.5 percent growth in 2017, in a bit to reduce unemployment rates, al-Garhy added. There is a plan to reach a 6 or 7 and may be 10 percent growth in the coming years, he said.

The government is studying all the funding options to fill the state budget deficit whether adopt a long-term borrowing in forms of bonds from outside. Egypt has no sensitivity when it comes to deal with any international financial institutions, the Egyptian finance minister asserted.

Influx of foreign investments

Moreover, Minister al-Garhy said he expects Egypt to see an influx of direct foreign investments in the coming period for its diversified economy.

There are a large number of foreign investors willing to pump new investments in Egypt in various sectors, notably infrastructure, electricity, transport, and road, al-Garhy added.