Egypt can expect economic growth "easily north of 4 percent" in fiscal year 2014-15, which ends in June, boosted by rising confidence and a windfall from lower oil prices, its finance minister said on Friday. Hani Dimian also told Reuters in an interview at the World Economic Forum in Davos that the budget deficit for this year would fall to between 10 and 10.5 percent of gross domestic product, down from 12.5 to 12.6 percent in 2013-14.
"It's a bit early to give an exact number for growth rates because we've only seen first quarter figures. But the signals for Q2 are also positive. That is why ... we're revising our growth rate from 3.8 percent, which was published in March 2014, and we're going to be easily north of 4 percent," Dimian said. "If you look at the boosters of that growth, you find that manufacturing is coming back, telecommunication and construction and partially early signs of the return of tourism," he said.
Egypt suffered a severe economic crisis after the 2011 uprising that toppled veteran autocrat Hosni Mubarak, ushering in a period of turmoil, leading to the election of a Muslim Brotherhood-led government toppled by the military in July 2013. President Abdel Fattah al-Sisi, who led the military takeover before having himself elected head of state last year, addressed the Davos forum on Thursday, appealing to global investors to return to Egypt as he consolidates stability. Thousands of Brotherhood activists are in jail and hundreds have been sentenced to death after collective trials.
Dimian said market confidence was gradually returning, as evidenced by the falling costs of insuring Egyptian debt against default and a recent credit rating upgrade to B+ from B- with a positive outlook by Fitch Ratings. He declined comment on this week's fall in the official exchange rate of the Egyptian pound, bringing it closer to the black market rate, saying that was for the central bank to manage.
Egypt is holding a major international investors' conference in mid-March to seek support for a range of long-term projects from the construction of a second Suez Canal parallel to the existing water, to industrial and agricultural projects. Core inflation was holding steady at 7 percent, within the government's single-digit target range, the medium-term target for the budget deficit was around 8 percent, and domestic debt of 80 to 85 percent of GDP, down from 97-98 percent today. Dimian added the government expected to issue international bonds worth $1.5 billion in the next three to four months.