Experts have deemed as a “difficult venture” a government target to attract foreign direct investment (FDI) worth $30bn by 2030, within a long-term economic and social plan.
Egypt attracted about $6.4bn in fiscal year (FY) 2014-2015, compared to $4.6bn in FY 2013/2014. The targeted FDI comes as part of Egypt’s vision for 2030, according to Deputy Minister of Planning for Monitoring Nihal Al-Mogharbel.
Egypt 2030 targets enhancing growth rates to 12%, bringing the Egyptian economy to rank 30th globally, measured by the value of GDP, instead of its current ranking of 41st, she said.
Former deputy executive director of the International Monetary Fund (IMF) Fakhry El-Fiki deems this venture a difficult one, saying that the government must increase FDI to $30bn through genuine and serious institutional, administrative, and legislative reform, in order to eliminate any bureaucracy facing investments.
El-Fiki commended the Central Bank of Egypt’s (CBE) step to devalue the Egyptian pound against the US dollar. He emphasised that it would help Egypt obtain new investments, however noting that it is only one step and therefore not enough on its own.
He demanded that financial policy makers improve the business environment, including speed of licensing, ease of entry and exit from the market, and the execution of contracts.
Al-Mogharbel said the actualisation of Egypt’s 2030 vision depends on the government’s success in reducing the population growth rate from 2.8% to 2.4% annually, along with installation of the current tax policy with respect to income tax at 22.5%, for example.
Egypt aims to reduce the poverty rate from 26.3% currently to 15% of the population by 2030, which requires an overhaul of the social protection system.
In addition, the government must reduce the public debt-to-GDP ratio from the current 93% to 75%, Al-Mogharbel said at a Thursday panel discussion session of the Egyptian National Competitiveness Council, entitled “The government’s financial management and how to fix it”.
MP Karim Salem demanded that a technical unit be established by the Ministry of Planning to follow up on the various public authorities’ obligations to implement the strategic vision programmes, including the state budget, starting with preparations for FY 2016/2017, as well as the state investment plan.
Salem said that Egypt’s goal of attracting FDI is difficult to achieve and require regaining the trust of national and international business communities in the Egyptian economy by achieving economic stability and security, and improving its business environment.
Assistant Minister of Finance for Treasury Affairs Mohamed Meit said the problem of population growth is unprecedented for Egypt and overwhelms all efforts taken so far.
Each year, approximately 2.8 million Egyptians are born, mostly in low-income families with poor health education. This challenge requires the state to achieve growth rates of no less than 7.5% per annum to keep pace with the population increase, Meit said.
Executive director in the Egyptian National Competitiveness Council Amina Ghanem said the current House of Representatives’ discussions and approval of the budget for FY 2016-2017 will contribute to enhancing Egypt’s transparency index globally.