CAIRO: Minister of Investment Mahmoud Mohieldin said on Monday that the Egyptian economy is expected to achieve a record growth rate that exceeds 7% this year joining the fastest emerging economies in Middle East and Africa. The minister said that the economy is set to grow above last year s rate of 6.8% due growth in real estate, converging industries, financial services and the telecommunications sectors. Mohieldin hailed during a press conference marking the release of investment data by the ministry for the first half of the 2006/2007 fiscal year, the measures taken by the government to stabilize the exchange rate against the main currencies, particularly the use of the overnight Interbank system, which stabilized the banking sector by achieving full conversion between currencies within the banking system. He said the state s current account balance achieved a surplus of a $1.8 billion or 1.2% of the Gross Domestic Product (GDP), and that foreign currency reserves that reached $26 billion will increase by $2 billion annually. Egypt is set to attract $8 billion in foreign direct investment by the end of the current fiscal year, he said, but at the same time pointed out that the main challenges to investment in general stem from difficulties in land, infrastructure, funding, conflict resolution and arbitration, red tape, and the lack of the availability of a skilled work force and energy transportation and distribution infrastructure in Upper Egypt and provincial areas. At the same time he expressed satisfaction with the government s efforts to control unemployment, which dropped to 9% by December 2006. He also revealed that the inflation rate has reached 12%, while the deficit in the state's general budget has gone down from 7.9% to 6.9% and is expected to drop further to nearly 5.5% by the end of the year. Mohieldin called for a more active role for the private sector in investing in Egypt, revealing that the contribution of private investments currently stands at 67% of total investment. He also hailed the success of the private sector in nearly breaking even with the public sector in terms of the share of the insurance market. As for the non-banking financial sector, the minister said that market capitalization, a key indicator of the performance of the Cairo and Alexandria Stock Exchange, has reached 60% of GDP. Mohieldin also announced the creation of a new contract execution unit at the Ministry of Investment to track and follow up on the execution of contracts signed by the ministry and the holding companies affiliated with the ministry. The minister was speaking before chairpersons of holding companies affiliated with the ministry, including the General Authority for Investment and Free Zones, the Capital Market Authority, the Cairo and Alexandria Stock Exchange, the Egyptian Insurance Supervisory Authority, the Mortgage Finance Authority, and the General Authority for the Economic Zone North West of the Gulf of Suez.
