Egypt minister projects 6% growth in 3 years
CAIRO (AP) — Egypt’s finance minister on Tuesday predicted growth rates of up to 6 percent within three years, which would mark a major turnaround following three years of political turmoil that has crippled the economy.
Hany Kadry Dimian told The Associated Press he expects growth to increase from 2.5% to 3.5% this quarter, as Egypt pursues several mega-projects -- including an expansion of the Suez Canal -- and seeks foreign investment and a revival of the vital tourism sector.
“Having all these projects in place, having investors already knocking on the door to be placed and well-situated with the development projects we have, with the Suez Canal, the 5-6% in 2-3 years is very doable,” said Dimian.
The Suez Canal linking the Red Sea to the Mediterranean is a major world trade corridor and a key source of revenue for Egypt, bringing in about $5 billion annually. The expansion project, which also includes six tunnels beneath the canal and a rail line, could boost revenues to $13 billion, according to government projections.
The government says it has financed the $8.5 billion project by selling investment certificates with a maturity of five years and a 12% interest rate to Egyptian nationals.
Investment Minister Ashraf Salman said the fact that the certificates were sold in just eight days sends a message that Egyptians are “believers in the regime.” However, experts say the high yields were also a draw.
The expansion project is billed as a precursor to the Suez Canal Development Zone, a mega-project aimed at transforming the five Suez Canal ports into magnets for foreign investment.
Egypt has struggled to attract investment since longtime dictator Hosni Mubarak was overthrown in a 2011 uprising.
Egypt’s first democratically elected president, Mohammed Morsi, was ousted by the military last summer amid massive protests demanding his resignation after a turbulent year in power. Since then more than a thousand of his Islamist supporters have been killed in street clashes and thousands more arrested. Egypt has also been rocked by militant attacks, primarily targeting security forces in the Sinai Peninsula.
But after three years of unrest, Egypt’s economy may be turning a corner, says analyst Angus Blair, chairman of the Signet Institute. He says Egypt is working on a “multi-dimensional approach,” including plans to broaden the tax base, stimulate investment, reform commercial law, and improve relations with the IMF.
“They’re behaving as if they’re a long-term government as opposed to the last few years when people kept saying: ‘We’re a temporary government.’”
He said it will be critical for the government to maximize employment as quickly as possible. “People on the street have got to feel like something’s changing,” he said.