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Tuesday, 16 May 2017

After glowing IMF review, Egypt awaits investment act’s executive regulations

Egypt should make it easier to do business and try harder to attract direct investment, economists tell Reuters’ Asma Alsharif. She describes the IMF report, which said its program in Egypt was off to a “good start,” as “glowing.” The Finance Ministry said the IMF review was "a new certificate of confidence for the strength of the Egyptian economic reform programme.” CI Capital economist Hany Farahat says “we are seeing aggressive reforms from the government to bring the deficit down and we’re seeing numbers improving beyond expectations when it comes to foreign liquidity in the banking sector.” Arqaam Capital Reham El-Desouki agrees, saying “Egypt has succeeded in attracting large amounts of portfolio investment. The next big step is attracting direct investment, whether local or foreign, and for that to happen a regulatory environment for investment needs to be cleared … The biggest risk now is execution risk and a lot of investors will be waiting to see how this will be implemented through the executive regulations. So there will be a pause in significant direct investment until a regulatory environment is clear.” Farahat also has eyes on the investment act, but notes that the key here is that the market is waiting for the executive regulations. “If the executive regulations don’t come out then there is no law … This is causing us not to tap into the potential that we would be capitalising on today if the whole legislative reforms had been completed,” he says.

GAFI will solicit business input on executive regulations, muddies timeline on which they’re expected: The General Authority for Free Zones and Investment (GAFI) — soon to be renamed the General Authority for Investment — will ask business and investor associations for their input on the executive regulations of the newly-approved Investment Act, which are expected sometime in the next three months, according to GAFI chief Mohamed Khodeir, Al Borsa said on Monday.

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