Egypt Tells Investors It Is Working To Jumpstart Economy

Egypt’s prime minister told international investors on Monday that he was working on rapid measures to make Egypt more attractive and get the economy back on track after more than a year and a half of political turmoil.

Hisham Kandil also said his government was open to increasing the amount of financial support it was seeking from the International Monetary Fund (IMF).

Speaking in a rare hour-long conference call with investors, he said Egypt aimed to quickly wrap up crucial loan talks with the IMF, take tangible measures to get fiscal problems under control and resolve investment disputes.

Egypt’s government has been on a charm offensive over the last few weeks to lure investors and aid from foreign governments to restart an economy that has grown by an anaemic 2 percent since last year’s popular uprising. So far it has attracted billions of dollars in commitments.

“We are aiming within three months to create quick wins on the ground,” said Kandil, who was named prime minister by newly elected President Mohamed Mursi on July 24.

These included a quick revival to the country’s tourism, which before the popular uprising that ousted Hosni Mubarak in early 2011 accounted for about 10 percent of economic activity and was a major source of jobs and foreign currency.

“One of the low-hanging fruits we are aiming at is the tourism industry,” he said.

Analysts say that attracting tourists back to the country anytime soon will be more difficult than ever after the internationally televised scenes of violent street protests last week over a film that denigrated the Prophet Mohamed.

Kandil said he hoped to wrap up negotiations for a $4.8 billion loan with the International Monetary Fund within two months and did not rule out seeking even an greater amount from the IMF.

“We don’t mind increasing that to a higher level, but we need to conclude our discussions,” he said. “Once we complete our discussion and agree on a programme, I don’t see any problem with increasing that.”

PLUGGING DEFICITS

Egypt desperately wants the funds to plug twin deficits in its budget and balance of payments that mushroomed after the uprising chased investors and tourists.

The new government is putting the final touches on an economic reform programme that it hopes to open up for public discussion and present to the IMF in the coming weeks, Kandil told the investors.

The programme includes cutting government costs by targeting subsidies to those who most need them and increasing revenue by improving the taxation system, but without adding new taxes, he said.

Another priority is to resolve investor disputes that have simmered in the political vacuum of the last year and a half.

“Once they are resolved, and I’m talking about weeks, we will be giving messages not only to their countries and to the outside world, but we will be resolving issues that are stalling many investments and been putting lots of people out of work,” Kandil said.

In the last few weeks alone, Qatar has promised Egypt $2 billion in budget support and $18 billion in investments, the United States has said it is working to forgive $1 billion in Egyptian debt and Turkey said it is preparing a financing package worth $2 billion.

Kandil said the new government had received various offers worth $150 billion. “If we can get this year 5 percent of this or 7 percent of this I think we can make a big difference in this country, and it will snowball.”

Reuters