The announcement was made following President Abdel-Fattah Al-Sisi’s visit to Doha on Sunday where he met with Qatar’s Emir Sheikh Tamim bin Hamad Al-Thani, senior government officials and the Qatari business community. The president highlighted the diverse investment opportunities Egypt offers and called on Qatari companies and businesses to expand their investments.
The economy was high on the agenda during President Al-Sisi’s visit to the Gulf. In Kuwait he reaffirmed Egypt’s keenness to strengthen economic and investment ties during a meeting with Sheikh Fahad Youssef Saud Al-Sabah, Kuwait’s first deputy prime minister, the minister of interior, and acting prime minister.
Kuwait said it is planning to invest in various sectors of the Egyptian economy, including in the fields of energy, agriculture, industry, banking, and pharmaceuticals. Kuwait also announced it will participate in the Egypt-Gulf Investment Forum, slated for later this year. In addition, a delegation from the Egypt-Kuwait Cooperation Council is scheduled to visit Cairo on 23-24 April.
“State visits have become a vital instrument of economic diplomacy, influencing investment flows, trade relations, and market sentiment,” Ahmed Rashad, professor of economic diplomacy and research fellow at the Economic Research Forum, told Al-Ahram Weekly. Rashad said his research had shown that “investment inflows to Egypt remain closely tied to the state of its bilateral relations.”
During the Egypt-Saudi Business Forum, held in Cairo this week to explore investment opportunities across various sectors, four investment agreements were signed, according to a statement from the General Authority for Investment and Free Zones (GAFI). They cover investment promotion, food industries, solar energy, metal industries, and real estate development and marketing. The Saudi delegation also met with Prime Minister Mustafa Madbouli to discuss joint cooperation opportunities.
Gulf investments have been instrumental in supporting the Egyptian economy at a time when global conditions continue to challenge reform efforts.
US President Donald Trump’s decision to impose tariffs on US imports, which he later paused for 90 days, wreaked havoc in markets across the world, including in Egypt. The pound depreciated against the dollar, though it later recovered, as foreigners exited Egypt’s debt market in search of safe havens. Standard Chartered Bank officials estimate $3 billion in portfolio investments left Egypt last week.
The risk of a global economic slowdown because of trade barriers is bad news for Egypt. Suez Canal revenues, already down 60 per cent in 2024 because of the war in Gaza and Houthi attacks on Red Sea shipping, will inevitably be affected. Falling canal receipts make it more difficult for Egypt to bridge its financing gap. The 2025-26 budget currently being reviewed by the House of Representatives estimates a budget deficit of LE1.5 trillion (around $30 billion).
On 11 April, S&P Global Ratings revised its outlook on Egypt to stable from positive while maintaining its ‘B-/B’ long- and short-term foreign and local currency sovereign credit ratings, saying: “The stable outlook balances Egypt’s commitment to fiscal and economic reforms against its vulnerability to lower global growth and potentially more volatile external financing conditions.”
On a more positive note, Fitch Ratings kept its assessment unchanged, maintaining Egypt’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B’ with a stable outlook.
In the meantime, the government went ahead with a planned hike in fuel prices in a drive to lower subsidies as per Egypt’s agreement with the International Monetary Fund (IMF). On 11 April the prices of gasoline, diesel, industrial diesel, gas allocated for brick factories, and butane gas went up by 10 to 30 per cent, with butane gas seeing the biggest hike. The Ministry of Petroleum announced that no further price increases are planned for six months.
In October, Madbouli had put a hold for six months — which ended in March — on fuel prices in an attempt to contain runaway prices.
Egyptians who had been hoping that fuel price hikes would be delayed because of the fall in global oil prices on the back of fears of recession triggered by Trump’s trade war, were disappointed.
The fuel price increase is warranted even though global prices of oil are falling, Perrihan Al-Riffai, nonresident senior fellow at the Atlantic Council and founder of Summits Economic Consulting, told the Weekly. Increasing the price of fuel at the pump, in an environment of lower global prices, reduces the overall fiscal burden and creates space to support more targeted social assistance programmes, something that the government is very keen to do, says Al-Riffai.
Fuel increases are a source of concern because of their impact on other prices. Rashad said the fuel price hikes will have an inflationary effect, both directly, through higher fuel costs, and indirectly as a result of pass-through effects given fuel is an essential input in the production and transportation of other goods.
Nemat Choucri, head of research at HC Securities and Investment, said the diesel price increase will lead to higher food transportation costs and hence higher food and beverage prices, while the price revision of heavy fuel oil (mazut) will increase production costs for the industrial sector. She added, however, that the favourable base effect is likely to keep inflation rates for the remaining months of 2025 significantly lower. Urban headline CPI inflation recorded 13.6 per cent in March 2025, up from 12.8 per cent in February.
Rashad stressed that economists generally prefer subsidising people rather than goods, especially when subsidies lead to overconsumption and increased emissions, though this approach requires a social safety net capable of accurately identifying needy households.
Al-Riffai agreed, pointing out that Egypt is a net fuel importer with weakened macroeconomic fundamentals because of its fiscal and current account deficits, operating in a challenging geopolitical environment that has greatly impacted its foreign currency receipts.
“Not only are fuel subsidies a drain on the government’s scarce resources, they also favour higher-income households, particularly those with the means to own and operate luxury vehicles,” she said. Low-income households that rely on public transport and consume significantly less fuel do not receive comparable advantages, exacerbating inequalities. Al-Riffai stressed the need to ensure that assistance is more equitably distributed and targeted towards those who need it the most.
The fuel price hike complicates efforts to curb inflation, especially considering that the gap between international oil prices and local fuel prices has widened following the depreciation of the pound, noted Rashad. The Central Bank of Egypt’s (CBE) Monetary Policy Committee (MPC) is scheduled to meet on 17 April to decide on interest rates.
Choucri expects the MPC to cut interest rates by 150 basis points at its upcoming meeting to stimulate local economic growth. “The Egyptian economy was able to contain inflationary pressures, albeit still above the CBE’s targets. Our carry trade is still attractive, and there is noticeable improvement in the net foreign assets position of the banking sector, allowing the smooth recent exit of some foreign investors from our treasuries market,” she said.
Overnight deposit and lending rates currently stand at 27.25 per cent and 28.25 per cent, respectively. The MPC has kept rates unchanged for seven meetings after it had hiked them by six per cent in March 2024, bringing total rate hikes to 19 per cent since it started its tightening policy in 2022.
These events should not dampen investor interest, added Al-Riffai. Investors have historically responded positively to Egypt’s macroeconomic and structural reform initiatives, and their reaction to the government’s recent fuel subsidy correction is expected to follow a similar pattern. “Consolidation efforts, improving debt dynamics, and ongoing structural reforms, ceteris paribus, enhance Egypt’s appeal as an investment destination,” she said. She warned, however, that investor sentiment could be negatively affect should the price increases result in elevated inflationary pressures or provoke social tensions, underscoring the importance of ensuring that price adjustments remain data-driven and are accompanied by a robust social protection framework.
She is also optimistic that one potential outcome of protracted US-China tensions may be a redirection of Chinese exports towards alternative markets, Egypt included, which could strengthen Egypt’s trade links and supply chains.
* A version of this article appears in print in the 17 April, 2025 edition of Al-Ahram Weekly
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