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Egypt: Foreign Cash Inflow Exceeds $163 Bn in 3 Years

Egypt: Foreign Cash Inflow Exceeds $163 Bn in 3 Years

Tuesday, 12 February, 2019 - 13:15
A man counts Egyptian pounds outside a bank in Cairo, Egypt. (File photo: Reuters)
Cairo - Asharq Al-Awsat
Foreign cash inflows in Egypt have exceeded $163 billion in the last three years, as the country’s gross domestic product (GDP) rose 5.5 percent in the second quarter of fiscal year 2018/2019, announced Prime Minister Mostafa Madbouli.

Speaking at the Egypt Petroleum Show (EGYPS) 2019 conference, Madbouli added that Egypt's foreign exchange reserves rose from about $15 billion to exceed a record of $42 billion, noting that the GDP rose 2 percent to 5.5 percent.

He went on to say that the current challenges facing Egypt did not hinder the government to shape a new future, meet the needs of Egyptians, and achieve a better life for coming generations.

Ministry of Finance revised its average expected the exchange rate to EGP18 to the dollar from EGP17.25 for the 2018-2019 fiscal year.

The report, issued after the first half of the financial year running from July to June, also revised its forecast for the average interest rate offered on treasury bonds and bills to 18.6 percent, up from 14.7 percent previously.

The Egyptian pound has strengthened slightly against the US currency since late January and was trading at EGP17.605 to the dollar on Sunday.

On Monday, Moody's said that real GDP growth in Egypt is forecast to reach 5.5 percent in 2019 and 5.8 percent in 2020, and banking penetration will deepen, supporting deposit and loan growth.

Moody also maintained its positive outlook on the Egyptian banking system, driven by an improving operating environment.

Senior Vice President at Moody's Investors Service, Constantinos Kypreos, stated that the accelerating growth in Egypt reflects increased public and private-sector investment, higher exports and a recovery in tourism.

"We expect balance sheet growth of around 15 percent in 2019 and for banks to maintain ample local currency funding, high liquidity, and strong and stable profitability."

On the other hand, HC Securities and Investment (HC) expected another cut in subsidy by July 2019, which may result in renewed inflationary pressures.

The report indicated that those expectations, in addition to the rise in the global interest rate, support the postponement of the resumption of the monetary easing policy to 2020, projecting a reduction of interest rate by 500 basis points.

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