Egypt has begun the road to a free and growing economy, says PricewaterhouseCoopers in a recent, glowing report on the Egyptian economy and its prospects issued last Thursday. The crux of PwC’s argument is that Egypt’s road to economic recovery is split into “pre-float” and “post-float” phases, saying the decision to let the interbank market set the FX rate has and will continue to attract foreign investment and make Egyptian exports more competitive. The real flood gates of investments will open up once investors feel that the USD / EGP rate has reached equilibrium, ending a period characterized by speculation and high volatility. “For now, the devaluation has resulted in a valuation gap due to the large decrease in business values compared to previously stated USD terms; valuation adjustments will therefore have to be made, resulting in a delay before [contracts] are sealed,” said our friend Maged Ezzeldeen, Egypt Senior Partner and Deals Leader at PwC Middle East, according to CPI Finance.

Beyond the float, PwC sees Egypt’s fundamentals as having improved through the government’s commitment to the reform agenda, which has become apparent in 2016. Legislative reforms such as the Investment Act, the upcoming Bankruptcy Act, and others will continue to drive investor confidence. Efforts to strengthen capital markets, including the program to IPO state-owned businesses, will help drive capital growth to reach EGP 3 tn from EGP 600 mn. Efforts by the government on the international front, including the eurobond issuance, will also drive growth. The report’s conclusion: This is a good time for investors to explore new investment opportunities in Egypt, as the market is beginning to settle down and absorb the post devaluation impact. You can check out PwC’s landing page for the report here or download the 4pp report in pdf.

…On the flipside, Global Risk Insights is taking a look at the possible economic and political risks to this anticipated take-off of the economy. The underlying factor most investors will look for is political stability as inflation rates spike, a continued high budget deficit, rising public debt, and subsidies reform prove unpopular (something to look out for as we hit presidential elections in 2018). Investors will be looking at the government’s response to this unpopularity, according to the report. Terrorism and security continues to loom over any economic progress, writes Cecil Gueren.