Issa Fathi, managing director of Cairo Securities Brokerage Company, told Al-Arabiya that foreign investors’ investment of about $250 million in debt instruments and the Egyptian stock exchange is a point in the sea that needs more to achieve stability.
Fathi explained that Egypt’s financing gap is large and we still have a long way to go to reach a balance point in the foreign exchange market, the stability of which supports all aspects of the Egyptian economy.
He added that foreign investors are waiting for the exchange rate to peak, which contributes to blurring the difference between the official and black markets, and at the same time they begin to pump more money into the local market, explaining: “In 2016, we witnessed a large influx of foreigners with exchange hitting £20 and with it dropping to £15.7 we saw an exit to take advantage of the currency difference and make capital gains.
He noted that foreign investment is important for Egypt to fill the financing gap, since domestic savings are not enough to cover demand to meet the government’s growth targets of 6% or 4%, according to the International Monetary Fund.
“Foreign investment is needed to support growth in Egypt and an LE 150 billion initiative to support the industrial and agricultural sectors should have been available in 2016,” said Issa Fati.
The Egyptian government has launched an initiative to finance the industrial and agricultural sectors in the amount of 150 billion Egyptian pounds at an interest rate of 11%, on the condition that the state covers the difference in interest rates.
Prime Minister Mostafa Madbouly said £140bn would be used to finance working capital operations and about £10bn to finance the acquisition of capital goods.
He added that the initiative will come into force after the approval of the Council of Ministers at its meeting next week, for a period of 5 years.
A bank source said that the volume of transactions that took place in the interbank dollar market during yesterday’s trading on Wednesday increased significantly and for the first time in several months amounted to between $650 million and $750 million, compared with an average of about $150 million over the last period.
The source said that during trading on Wednesday, banks also received significant foreign exchange inflows worth more than $250 million from large international organizations, which, after a long absence, returned to invest in the Egyptian market, which confirms the return of confidence of the international business community to Egypt, the Egyptian economy and recent monetary policy measures.
