Economy in a week: Sisi is a ‘De Gaulle’ figure says PM

Egyptian Cabinet members explain roadmap progress at the World Economic Forum while instigating measures to boost economic output; Arab neighbours take the lion's share in FDI in 2014, and local investments nosedive in 2013.

Members of Egypt's Cabinet were present at the World Economic Forum in Davos last week, discussing the economic future of the country and praising the political volte-face following the popularly championed regime change in July.

Prime Minister Hazem al-Beblawi met with WEF founder Klaus Schwab to discuss developments in Egypt, stressing his government's will to use whatever means necessary to help the country through this critical stage.

Central to his presentation, Beblawi briefed representatives of investment companies on the country's political and economic developments, and the steps taken to promote growth, lure back investment and restore tourism. He cited gains on the bourse and an upturn in Egypt's credit rating as tangible progress in the economic arena over the past few months.

Egypt's main index EGX30 has been steadily increasing since June 30, 2013, surpassing the 7,200 mark, a level it has not exceeded since May 2010. The market has enjoyed an influx of liquidity with turnover exceeding LE2.6 billion, indicating a confidence in the market and general future of the nation’s economy.

Beblawi said that his government seeks to build an “open civil democratic country” in which all citizens live in a just system. He stressed that security and stability are prerequisites for achieving economic development.

Two days after his statements, and during the third anniversary of the 2011 revolution, 29 people were killed in anti-government protests, with over 1000 arrested.

Nabil Fahmy, Egypt's foreign minister, said during a televised interview with CNN that Egypt is facing two main challenges, “law and order on the one hand and opening up society politically on the other.”

The Prime Minister applauded the efforts of Commander-in-Chief of the Armed Forces Abdel Fattah al-Sisi in putting the country back on track, comparing him to war heroes such as De Gaulle and Eisenhower.

Minister of Finance affirms: Egypt on the right track

Speaking at the WEF, Egypt's Finance Minister Ahmed Galal said within 6 months the country would have laid the foundations for a sound political and economic regime that answers to the population’s needs, including a new constitution, president and parliament.

Though the new constitution was passed by 98 percent, setting the stage for parliamentary and presidential elections, less than 40 percent of the electorate took part.

Galal acknowledged that Egypt is undergoing a series of economic issues, one of which is the slow growth that the country has experienced, stooping as low as 1.5 percent in the fourth quarter of the 2013 financial year, compared to 3.3 percent the previous year.

“We do have macroeconomic balances — including the budget deficit; we do have sluggish economic growth with high unemployment and a strong sense of injustice,” he said at the forum.

The government has engaged in a series of initiatives to boost economic performance, most recently allowing the private sector to import gas using state networks, Minister of Petroleum Sherif Ismail told Reuters.

This move should help address energy shortages that limit production for industrial areas with a cap on their energy usage.

Energy-intensive industries, such as cement and steel companies, were forced to reduce production in recent years during periods of peak use given domestic energy shortages.

Ismail said the government has lifted restrictions on companies that were prevented from importing natural gas independently, allowing them to use its networks for gas imports at their own expense.

Other initiatives include the introduction of essential amendments to the law on protection and monopoly prevention, according to the State Information Service (SIS) website.

The amendments should help improve market dynamics and achieve economic justice, according to a statement by Minister of Industry Mounir Fakhry Abdel Nour last Tuesday.

The minister said the Egyptian Competition Authority (ECA) would be more independent, with powers to better enforce the law and create an economic environment based on fair competition and free market regulations. The amendments will be discussed in a Cabinet meeting and referred to the president for ratification, Abdel Nour added.

FDI to go up by 33 percent in 2014, says investment minister

Investment Minister Osama Saleh said that Foreign Direct Investments (FDI) in Egypt are expected to rise by a third, reaching around US$4 billion in 2014, he told Reuters during the World Future Energy Summit in Abu Dhabi last Monday.

A large proportion of the investments will be coming from the Gulf. Most notable is the $2.2 billion investment from UAE-based retailer Majid Al-Futtaim (MAF) over the next four to five years.

MAF will expand one of its shopping malls in Cairo's Maadi district at a total cost of LE3.2 billion, while investing LE4.9 billion in the 'Mall of Egypt'. Saleh said that total investments from the UAE are valued at $4.6 billion.

Further, an agreement will be signed between the Holding Company for Maritime and Land Transport and Air Arabia to establish a Port Said Quay, costing approximately $200 million.

Over the last three years, total FDI was valued at $9.2 billion, with $2.2 billion in 2011, $4 billion in 2012, and $3 billion in 2013.

Local investments show considerable decline

Figures from the Information and Decision Support Centre (IDSC) show that issued capital for companies established between January and November of 2013 stood at LE24.7 billion, showing a drop of 47.6 percent compared with the same period last year, according to state-owned EgyNews.

Capital increase by existing companies also fell by 16.8 percent for the same period to reach LE9.13 billion, compared to LE10.98 billion a year earlier.

The report added that new cases of bankruptcy for individuals and corporate bodies went up in October 2013 to reach 93 cases, compared to 65 legal cases in October 2012.

Explosions push government yields higher

Several recent explosions have caused the price of Egyptian government bonds to fall, and in turn pushed up their yields.

The yield on the government's 5.75 percent bonds due in April 2020 climbed eight basis points to 6.01 percent, the first advance on a closing basis since 3 January 2013.

Egypt's credit default swaps increased 17 basis points to 490, the highest since January 9, according to the Capital Market Authority.