Egypt's foreign direct investment falls by 24.4%

Egypt’s net foreign direct investment (FDI) fell by 24.4 per cent during the first six months of the financial year 2018-19, the country’s central bank announced yesterday.

The Central Bank of Egypt (CBE) said in a statement that the country’s FDI had fallen to $2.841 billion, compared to $3.762 billion during the same period last year.

Egypt’s financial year starts in July and lasts until June of the following year.

The Egyptian government recently issued an investment law, which was said to be providing an incentive package for foreign investors.

READ: Egypt to cut electricity subsidies by 2022

Egypt announced last year that it aimed to increase its FDI to $11 billion in the current fiscal year, compared to $7.9 billion in the financial year 2017-18.

CBE recently pointed out that the country’s Suez Canal revenues had risen by 5.7 per cent, reaching $2.928 billion during the first half of the current fiscal year, compared to $2.768 billion during the same period of the previous year.

The bank’s official data also showed that the remittances of the Egyptians working abroad had fallen by 6.7 per cent, registering $12.045 billion in the first half of the current fiscal year, compared to $12.923 billion during the previous financial year.

The Central Bank of Egypt [File photo]

In November 2016, the International Monterey Fund (IMF) offered Egypt a $12 billion loan aimed at reviving the country’s struggling economy, bringing down public debt and controlling inflation.

The government’s deficits have shrunk, its national debt burden has begun to fall and foreign exchange buffers have been rebuilt, as President Al-Sisi’s austerity plan has curtailed public spending.

READ: Egypt, international institutions discuss $2bn loan for ‘transport development

However, the policies have added to the financial woes of many millions of Egyptians living below the poverty line, who have complained of being unable to afford basic necessities since the price jumps. Inflation has soared after the government floated the Egyptian pound in 2016, and last year, the Treasury announced that it was planning to increase public tax revenues by 131 per centby 2022.

The impact has been so severe, that it has even prompted popular protests in the heavily surveyed state; last year, in an unprecedented show of digital dissent, hundreds of thousands of Egyptians took to Twitter to voice their discontent and call for Al-Sisi to step down in the aftermath of fuel and electricity subsidy cuts.

The results of the measures have also been mixed; despite decreasing the debt burden, foreign direct investment in Egypt fell by some $200 million to $7.7 billion in the 2017-2018 fiscal year according to the central bank, with most of the existing funding still concentrated in the gas and oil sectors.