(AFP PHOTO ERIC PIERMONT)
Reuters – Egypt will announce details of its second stimulus package since Islamist President Mohamed Morsi was ousted in July within days, its finance minister said on Tuesday, aiming to boost tepid growth and reassure investors.
Egypt’s economy has continued to suffer from investment outflows and a drop in tourism during political turmoil since autocrat President Hosni Mubarak was toppled in an uprising in 2011. The economy grew by just 1.04% in the three months through last September from a year earlier, according to latest central bank data.
In the latest sign of turmoil, a senior Egyptian Interior Ministry official was killed outside his home in Cairo on Tuesday, putting pressure on the military-backed government as it struggles to contain an Islamist insurgency.
The interim government is trying to give out assurances that the country is safe for investors.
Bolstered by a pledge of more than $12bn in aid from Gulf countries since Morsi was ousted, the government introduced an EGP 30bn ($4.3bn) stimulus package in 2013 and said it would follow up with a second package, also of around EGP 30bn, this month.
Finance Minister Ahmed Galal previously said that EGP 20bn of the new stimulus package would be spent on public investment. The rest would be used to cover a public sector minimum wage being introduced.
“It is ready, we just have a part missing with the oil ministry, … and we’ll announce it within days,” Galal told reporters at an investment conference on Tuesday.
Army chief Field Marshal Abdel Fattah Al-Sisi, who deposed Morsi after mass protests against his rule, could also announce within days that he will run for the presidency, a vote he is almost sure to win.
Khalil Ibrahim, managing director in asset management at EFG Hermes, said the killing of the Interior Ministry official could unnerve investors.
“They get assurances and this puts them back,” he said.
Galal said the government aimed to launch the second stimulus package without increasing the budget deficit, which stood at around 14% of gross domestic product in June, the end of the last fiscal year. The government aims to bring the deficit down to 10 percent of GDP by next June.
Galal said the deficit would shrink to 8% of GDP within the next two to three years.
Speaking at the same conference, Investment Minister Osama Saleh said that Egypt expects to beat its target of attracting $4bn in foreign direct investment (FDI) in the year ending in June 2014, but did not say by how much.
FDI totalled $3bn in the year ending June 2013, almost $1bn less than in the previous year.
Before the 2011 revolution, Egypt was attracting net foreign direct investment of around $8bn annually, according to central bank data.
George Kazakos, a partner in Levant Partners, a Greece-based asset management firm, said political turmoil was still a problem for foreign investors.
“There are opportunities in Egypt but only under conditions,” he said on the sidelines of the conference.
“I will wait. You have to see the political situation start to settle in order to see foreign investment.”
