Egypt’s Finance Minister said the $23 billion that foreigners invested in Egyptian Treasury bills will stay in the country, owing to its improved credit profile and rising global liquidity.
The trade-off between risks and returns remains attractive, and investments have been rising in “recent weeks and months,” Amr El-Garhy said in an interview with Bloomberg TV, adding that credit rating companies, which haven’t significantly upgraded Egypt’s junk rating in the past two years, should give Egypt a “better look.”
Concerns about the nation’s ability to continue to attract money from abroad have been compounded in light of rising global interest rates and lower yields inside the country. A recent Bloomberg report added that the funds played a key role in bridging the gap in Egypt’s finances with the outside world and have helped boost the nation’s foreign reserves to record levels.
Foreign investors renewed their interest in Egypt after the Government undertook a number of reforms to overhaul the economy in November 2016, which included floating the currency and considerable cuts in subsidies. These measures, backed by the International monetary Fund (IMF) saw a five per cent economic growth, enabling the Government to raise over $13 billion on international bond markets.
However, the weaker currency still meant an inflation rate exceeding 30 per cent in 2017, adding pressure to Egypt’s population of 96 million, of which almost half live near or below the poverty line. 2018 saw a slow down in price increases, easing the annual rate to 13.3 per cent in March, Bloomberg added.
The minister said Egypt is witnessing “good momentum” when it comes to inflation, and reiterated predictions that it would drop as low as 11 per cent by the end of 2018.