The targeted growth rate by the end of the current fiscal year of 3.5% will hopefully be surpassed to reach 3.8%, though it will not reach 4%, said Minister of Planning Ashraf El-Araby.
El-Araby announced at a Tuesday press conference that the first quarter’s growth rate of fiscal year (FY) 2014/2015 reached 1.1%. The figure was 6.8% higher than the same quarter last year, which registered 1% growth.
The minister added that “the tourism sector and Suez Canal achieved positive growth during the first quarter of the current fiscal year”. He said that the Suez Canal achieved a growth of 9.1% and industrial production exceeded 2%, while production reached 9.1%.
Growth during the first quarter of the FY 2013/2014 was 1%, and 1.4% for the second quarter, and 2.5% for the third quarter, and reached 3.7% during the fourth quarter, and continued to climb to 1.1% during the first quarter of FY 2014/2015.
El-Araby said the growth signals that economic reforms undertaken by Egypt are moving in the right direction.
He added that there was a slight decline in unemployment indicators during the first quarter, reaching 13.1%, compared to 13.3% from the last quarter of FY 2013/2014. “Economic recovery will take two years to affect the unemployment indicators and increase employment opportunities, and despite a slight dip but it motivates us for more reforms with the aim of lowering it during the coming phase,” the minister said.
Tolls on goods and services taxes rose to 23.7% during the first quarter and so did customs to reach 45%, according to the minister.
Energy sold to industry increased at rates ranging between 5%-10%.
El-Araby said these indicators will come in Egypt’s favour for the International Monetary Fund (IMF) report to be issued before the economic summit scheduled for March.
“The government is going according to the economic reform plan and has many measures in this regard with what deals with investment laws and resolving investors problems,” he said.
El-Araby added that the coming phase will witness a lot of dispute resolutions with investors through a dispute settlement panel.
The challenges facing the Egyptian economy from fiscal deficit and inflation and public debt still remain, according to the minister, saying: “I will not deny these challenges but the government is determined to moving in the direction of reducing them in the current phase which is what has already begun.”
The government launched the construction of the Suez Canal project funded through the launch of investment certificates yield 12% interest, according to El-Araby. There will also be the construction, maintenance, and expansion of 3,200km of roads starting next year.
He stated that these roads represent 20% of the total existing roads in Egypt, and will contribute to the push for the annual growth target.
El-Araby sees that road construction will extend to the railway network through its development and utilisation of its assets. This includes raising the share of freight by 10% annually, compared to a current rate that does not exceed 1%.
The second phase of the road programme will include the construction of 4,800km of roads following the completion of the first phase.
On the million acres project which the government plans to rehabilitate, El-Araby said: “The space will be cultivated by 90% groundwater wells and 2,000 wells were drilled in different areas.”
He added that the state and companies will cooperate in the project, and that the state will withdraw from it afterwards.
The government has completed the establishment procedures for a holding company to implement projects, 20% owned by the state and 80% by the private sector, according to the minister.
The company’s authorised capital is EGP 10bn, with the government hoping to reach actual capital of EGP2bn. A number of meetings are being held with industry associations and banks and endowments on the contribution of its capital, according to El-Araby. He added that some of the banks that have expressed an interest include Faisal Islamic Bank , Arab International Bank, as well as the Egyptian Junior Business Association.