World Economy

Egypt Regenerating Battered Economy

Egypt Regenerating Battered Economy
Egypt Regenerating Battered Economy

Egypt has turned more than half of initial agreements signed at a March investor conference into investment projects, the planning minister said, as Cairo tries to regenerate an economy battered by years of turmoil.

The government said it had signed deals worth $36 billion at an international investment conference in Sharm El Sheik, and that the total worth of deals and memorandums of understanding signed was $60 billion, in addition to $12.5 billion pledged by Persian Gulf Arab allies, Reuters reported.

“Over 50% of the MoUs we signed in the Sharm El Sheik summit have turned into deals and work has started on them,” Planning Minister Ashraf al-Arabi said in a Reuters interview on Saturday.

Egypt has signed exploration deals worth around $21 billion with global oil companies such as BP, BG and Italy’s Eni since the conference. It also signed a deal with Germany’s Siemens worth $9 billion to supply gas and wind power plants to boost Egypt’s electricity generation by 50%.

The conference was an important test of Egypt’s reform agenda under President Abdel Fattah al-Sisi, a former army chief who wants to remove investment barriers to help turn around the ailing economy of the Arab world’s most populous country.

He is focused on state-driven mega projects, such as Egypt’s New Suez Canal, a project he sees as a symbol of national pride and a major chance to stimulate an economy suffering double-digit unemployment.

Egypt sees unemployment falling to below 12% in the financial year 2015-16, and less than 10% by 2019, Arabi said on Saturday. It stood at 13.3% in the financial year 2014-15 before falling to 12.8% in March.

The new canal is set to be inaugurated at a ceremony on Aug. 6. The first cargo ships passed through in a test-run last week.

The army led work 12 months ago on the $8-billion canal, flanking the existing, 145-year-old waterway and part of a larger undertaking to expand trade along the fastest shipping route between Europe and Asia.

The existing Suez Canal is a vital source of hard currency for Egypt, particularly since the 2011 uprising that scared off tourists and foreign investment. It is projected to bring in $5.4 billion in the financial year 2014-15 and $5.5 billion in 2015-16, Arabi said.

The New Suez Canal, which will allow two-way traffic of larger ships, is supposed to increase revenues by 2023 to $15 billion.

The planning minister also said he did not expect more grants from Persian Gulf Arab allies in the current financial year, adding that he instead expected fuel aid.

“We are already in talks with Saudi Arabia, Kuwait and the United Arab Emirates over this,” Arabi said.