BACK ON THE GROWTH PATH AND SEEKING INVESTMENT
A rock of stability in a troubled region, Egypt has a clear vision of where it wants to go and how to get there. The most populous Arab nation is undertaking major economic development projects to support its drive for exports.

President Hosni Mubarak often remarks that Egypt’s most valuable asset is its people. The largest of the Arab nations, and the second largest economy, has a population of 70 million. A huge consumer market in its own right, Egypt possesses a well-educated, skilled, and multilingual labor force that is expanding by almost a million a year, with the largest number of university graduates in the Middle East and Africa.

Egypt is an important producer of oil and—increasingly—gas, and has a tourism industry that has recently been bringing in record numbers of visitors. Other important sources of hard currency include remittances from Egyptian workers abroad, tolls from the Suez Canal, and foreign aid.

The economy enjoyed strong growth in the late 1990s and, while this slowed in recent years, there are strong indications that it is coming back and that the long-term macroeconomic prospects are favorable. The International Monetary Fund (IMF) which visited Egypt in January, judged the country’s economic performance much higher than had been expected—despite the war in Iraq, instability in the Middle East, and the weakness of the world economy. Growth in the first quarter of the current fiscal year 2003/2004 was 4.2% and is expected to rise to 4.5% by June 2004.

Egypt’s oil revenues have increased significantly with the rise in world oil prices and investment by international oil companies in exploration. Both the commodities (including oil and gas) and agricultural sectors have shown growth. Revenues from the Suez Canal have shown a marked rise, up by 25% to $2.5 billion in 2003 from $2 billion in 2002, following the carrying out of improvements, and the 1998-2002 deficit in the balance of payments has been turned into a $650 million surplus.

The government, which wants to attract greater foreign investment into the country, is continuing its policy of economic reforms, liberalization, and privatization. Egypt has implemented a market-determined exchange rate regime, and new legislation has been introduced with respect to protection of intellectual property rights, banking reform, and combatting money laundering.

Import and export procedures are being streamlined and the bureaucracy that has discouraged foreign investment in the past is being reduced.

Prime Minister Atef Ebeid declares, “Our objective is to make Egypt part of the developed world with rules that are no different from the rules in Europe, the United States, Japan, or South East Asia, but with added incentives.”

DAVID WELCH U.S. Ambassador to Egypt

Dr. Ebeid points out that Egypt has a clear and competitive advantage with regard to its geographical location at the crossroads of Europe, Africa, and Asia. He notes the quality of investment coming into the country. “During the last three years we have attracted some of the best investors from around the world, not only in the oil sector but also in the production sector.”

Mohamed Ibrahim Soliman, Minister of Housing, Utilities and Urban Communities, believes that U.S. investors can play a significant role in the ongoing development of the country’s infrastructure. “We have already invested about £65 billion Egyptian pounds ($10.6 billion) in the area of water and sewage treatment, for example. For this kind of investment we need a foreign investor to work with us in management, maintenance, and rehabilitation.”
U.S. Ambassador David Welch points out that Egypt has a distinct advantage in the region when it comes to attracting investment. “One of the strongest selling points of this country is its security and stability,” he says. “In a region that has seen no small share of difficulties in recent years, security and stability is like money in the bank.”

AHMED MAHER EL SAYED Minister of Foreign Affairs

Egypt is committed to bringing about peace in the Middle East. Amre Moussa, Secretary General of the League of Arab States, says Egypt has led the Arab efforts in the peace process and has been an active player from the beginning. “Egypt has a special role and status, and the way it acts is very influential.”

The government supports U.S. involvement, which it regards as crucial to the peace process. Ahmed Maher El Sayed, Minister of Foreign Affairs, says, “It is very clear that without the continuation of U.S. engagement, we will not reach peace.”

According to the Minister, Egypt itself is motivated to promote peace for reasons that are both idealistic and a matter of national self-interest. “You cannot build a country in an environment that is antagonistic,” he says.