Egypt has been facing a historic shortage in foreign currency since the end of last year, a major obstacle to attracting foreign investments, Minister of Finance Amr El-Garhy told Ahram Online Tuesday on the sidelines of the AmCham “Door Knock” meetings in Washington DC.
El-Garhy’s statements coincide with a leap in the rate of the US dollar against the local currency on the black market, reaching around EGP 11, while the official rate has been stable at 8.78, according to Al-Ahram news website citing traders.
A delegation from US companies and members of the American Chamber of Commerce in Egypt is currently visiting Washington DC to meet officials and policy makers from the International Monetary Fund, the World Bank and the US State Department, as well as investors and executives of large US companies.
Egypt's foreign currency reserves stood at $16.5 billion in March, less than half of the $36 billion it registered before the 2011 uprising, which was followed by political and security unrest that spooked investors and tourists, the main sources of foreign currency.
However, El-Garhy stressed that “we have faith that investors will come to our country because reforms are ongoing.”
Egypt embarked on a fiscal reform programme in the fiscal year 2014/15, raising new taxes including the property tax and cutting energy subsidies to clench on a growing budget deficit.
The government aims to revive the economy and improve the state budget deficit through implementing the value added tax and continuing with the subsidy cut plans, El-Garhy said.
“But carrying on with liberalising energy prices is not on the agenda now,” he added.
Last week, El-Garhy said that due mainly to lower global energy costs, Egypt will reduce spending on fuel subsidies by nearly 43 percent in the 2016/17 budget to reach EGP 35 billion ($3.94 billion) in an attempt to cut the budget deficit down to 9.8 percent of the GDP, compared to 11.5 percent projected by the end of current fiscal year.
Also, to trim this deficit, Egypt will consider all options for long term debt, including international bonds and global financial institutions, El-Garhy said.
“Egypt does not have any sensitivity towards dealing with any international financial institution,” El-Garhy said.
On 15 April, an International Monetary Fund official said at a press conference in Washington that Egyptian authorities have not formally requested a financial programme of assistance from the IMF.