Growth still slow EGYPT's economy will grow at two per cent in 2012 and at a slightly higher three per cent in 2013, according to the International Monetary Fund's World Economic Outlook (WEO). The IMF growth figures for Egypt fall below more optimistic forecasts by government officials who had said Egypt's economy would grow at 4.5 per cent. The WEO report issued biannually by the IMF said that the growth of oil importing countries, including Egypt, had been affected by "social unrest and political uncertainty, weak external demand, and high oil prices." On a related note Philip Gerson, deputy director of the Fiscal Affairs Department speaking at a press conference on Tuesday in Tokyo during the IMF/World Bank annual meetings pointed out that there was a large increase in the fiscal deficit in Egypt and in the Middle East in general, as a result of Arab Spring and the pressing concerns for expenditure and needs for social expenditure. "Over time those deficits need to come down and we [the concerned governments] need to move to a more sustainable set of public finances," he said adding that that will require better targeting of social expenditure and "greater mobilisation of domestic resources through things like a reform of the tax system, a broadening of the tax base, and other reforms that will allow the authorities there to generate more internal resources, to address it." Underlying potential THE IMPACT of the political transformation that Egypt has undergone in the past 18 months on the economy has been profound, but according to Robert Tashima, Africa regional editor at the Oxford Business Group (OBG), factors that could drive growth remain in place. "The first and most obvious factor is the sheer size of the domestic market," Tashima said during a press conference organised this week by the American Chamber of Commerce (AmCham) and OBG to launch the annual economic review entitled, "The Report: Egypt 2012." Tashima explained that Egypt's population of 85 million, 60 per cent of whom are under 30 years old, means there are sizeable opportunities for expansion of consumption and employment. Tashima also noted that the trade profile and sizeable supply of natural resources Egypt has are among the advantages that the Egyptian economy can use to drive growth. There are many trade agreements, like the COMESA and GAFTA, that give Egypt enormous long-term advantages of tariff-free access to more than 500 million consumers, he said. "Additionally, oil and gas reserves have been steadily increasing in the recent years." However, Tashima said that Egypt faces some challenges that have been exacerbated by the revolution. Among these are the lack of inclusive growth, depleting foreign currency reserves and low revenues, and the need to improve policy implementation and project delivery. Despite the challenges facing Egypt, Tashima said, OBG believes that there are five strategic elements that will help fuel growth: job creation and education, financial access, fiscal restructuring, policy clarity and legislative reform. Qatari support arrives A SECOND tranche of a $500 million deposit promised by the Qatari government to the Central Bank of Egypt (CBE) has arrived. This brings to $1 billion what Egypt has received so far of a promised $2 billion. The remaining $1 billion will also arrive in two equal tranches, according to Minister of Finance Momtaz El-Said. The Qatari deposit is meant to support CBE hard currency reserves. It is deposited at a 1.5 per cent interest rate for eight years, with a three years' grace period. The CBE's hard currency reserves lowered to $15 billion at end of September compared to $15.1 the month before. Discounts on lands MINISTER of Housing Tarek Wafik has said the Cabinet has approved a number of procedures that will facilitate the purchase of land by Egyptians living abroad. Foremost is a discount on land prices that ranges between $35-65 per square metre. For example, land in New Cairo will now cost $450 per square metre instead of $500. The Cabinet has also agreed that purchasers pay 25 per cent upfront, instead of 35 per cent, and they can pay the rest in instalments over five years. The government proposed selling land to Egyptian expatriates in an attempt to collect much needed hard currency. The plan is to collect $3 billion from the sale of 7,600 plots of land. The Cabinet's decision follows complaints that the price of land was too high.
