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Egypt Eyes Foreign Investments to Boost Growth

CAIRO—Egypt will need at least three years to restore its ailing economy to prerevolution levels after introducing reforms aimed at re-attracting foreign investments and boosting domestic growth rates, the Arab country's investment minister said Tuesday.

Egyptian officials told a financial conference in Cairo of their plans for further tax reforms, including a fresh value-added tax law, and the need to tackle issues such as an over-sized bureaucracy and often inconsistent legal frameworks that deter investors. They said their plans were already bearing fruit and that the current political stability has helped bring back confidence to the market.

But officials acknowledged that changing the country's economic system will require many years before it can achieve the same growth levels witnessed before the Egyptian revolution in 2011 that ousted strongman Hosni Mubarak.

"It's a difficult mission. We have a lot of challenges, but we're bullish that this is achievable," said Investment Minister Ashraf Salman. He said Egypt expects to attract $10 billion in foreign direct investment, or FDI, for the coming fiscal year but that it will take three years to reach the precrisis levels of $14.5 billion. These investments would mainly stem from the energy and industrial sector and be led by the Gulf countries, China and Russia.

"These good times will come again but it needs commitment and an honest facing of challenges," said Mr. Salman. He also called for social reforms including programs aimed at Egypt's very poor to run parallel with other changes or the country risks suffering unrest again.

"This time we are trying to learn from our mistakes and to put into consideration an integrated economic social reform program," Mr. Salman said.

The investment minister said it would take up to five years to witness gross domestic product growth levels of more than 6% again. The International Monetary Fund expects gross domestic product growth to be 2.3% this year, barely enough for the country to keep up with its population growth and budgetary needs.

"We need to get to Chinese levels of growth to get Egypt back," said Angus Blair, head of Signet, a Cairo-based regional forecasting consultancy firm.

For much of its recent recovery, Egypt has been reliant on Gulf allies Saudi Arabia, Kuwait and the United Arab Emirates, which have been backing Mr. Sisi's government with billions of financial aid.

"Egypt is doing a lot of right things but will still need some financial support for a long time," said Chris Jarvis, the IMF's mission chief for Egypt.

Egypt Finance Minister Hany Kadry Dimian said the country has asked the IMF for an economic assessment, the results of which it hopes will improve its image among investors ahead of a major economic conference the country is hosting in February. Such specific consultation hasn't been held since 2010. Separately, and in another sign that Egypt is receiving fresh external support, the government said it obtained a $500 million loan from the World Bank to help fund a natural-gas project.

"We are now at the point of a very significant economic takeoff," Mr. Dimian said. "There is a full turnaround compared to six or nine months ago."

Write to Nicolas Parasie at Nicolas.parasie@wsj.com<mailto:Nicolas.parasie@wsj.com

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