CAIRO: Egypt’s Foreign Direct Investments (FDI) recorded $2.8 billion during the first half of the 2013/14 fiscal year, compared to a total of $3 billion in the 2012/2013 fiscal year, General Authority for Investment (GAFI) chairman Hassan Fahmy revealed Sunday, according to Al-Ahram.
Egypt has been trying hard to revive its limping economy that was affected by the local unrest followed the resignation of former President Hosni Mubarak in the wake of January 25 Revolution in 2011, which kept tourists and foreign investors away.
“Approximately 8,945 companies were established during the FY 2012/2013, a number Egypt has never seen since 2000 when 2,890 businesses were established,” Fahmy said in his speech at the Business Climate Reforms in Egypt panel discussion Sunday.
The event was organized by the MENA-Organization for Economic Cooperation and Development’s (OECD) to discuss possible ways to stimulate local and foreign investments.
According to Fahmy, these numbers are indications to a better economic outlook in Egypt despite the current challenges.
Egypt’s economy is expected to grow by 2.3 percent and 4.1 percent in 2014 and 2015, respectively, according to the World Economic Outlook by the International Monetary Fund issued in April.
“Economic growth in Egypt is expected to be broadly the same in 2013, as political uncertainty will continue to weigh on tourism and foreign direct investment, notwithstanding the fiscal stimulus supported by GCC financing,” IMF stated in the report. Egypt’s economy grew by 2.1 percent in 2013.
Despite the aid Egypt received from Gulf States, it still needs financial assistance to achieve economic prosperity, Chief of the International Monetary Fund’s (IMF) mission Christopher Jarvis told AFP last month.
“The financial aid could come from Gulf countries, IMF, or other financial institutions,” Jarvis added.
Saudi Arabia, Kuwait, and the United Arab Emirates have nonetheless pledged a total of $12 billion in assistance to Egypt following the ousting of former Islamist President Mohamed Morsi in July after the mass protests against him.
Egypt’s budget deficit is expected to range between 340-350 billion EGP during the upcoming fiscal year 2014/15, which amounts to 14-14.5 percent of the country’s GDP, if economic reform procedures are not adopted, Minister of Finance Hany Kadry said during an April Cabinet meeting.
In attempt to assure foreign investors and attract more liquidity, the interim government recently passed a legislation immunizing State contracts with investors from third party litigation.
Interim President Adly Mansour approved the controversial law on April 22, which received widespread criticism and aroused concerns, on grounds that only an elected parliament may issue such a decision and that it “protects investors at the expense of citizens.”
A number of NGOs, activists, and rights groups decided to appeal the new law, finding no difference between this law and the constitutional decree issued by Morsi, which granted him absolute power and aroused public anger against his rule.
“We will file an appeal to the law before the Administrative Judiciary Court. We see it as a legalization of corruption, waste of public funds, and a gift for businessmen of the Mubarak era,” head of the Arab Center for Integrity and Transparency Shehata Mohamed told The Cairo Post last week.
Talaat Moustafa Group lawyer Shawqy el-Sayed told The Cairo Post that the new law enhances confidence in government contracts and will encourage businessmen to inject new investments in Egypt.
Defending the new law, Sayed said “it will prevent those who seek personal gains from misusing the litigation right, which dramatically harmed confidence in the successive governments with many court rulings nullifying government contracts.”