Egyptian Foreign Investment Falls

Foreign direct investment in Egypt slumped 35% in the first half of the fiscal year, making it hard for the government to meet its target of attracting US$10 billion by June 2010.

Foreign investment was about US$2.6 billion in the six months to end-December compared with $4 billion in the same period a year earlier, the central bank said in an e-mailed statement today.

“It’s very difficult to reach the government’s target now,” Mona Mansour, director at CI Capital Research in Cairo, said in a telephone interview. “It means they need about US$8 billion in the second half. That’s very difficult unless there is a major deal.”

Egypt depends on foreign direct investment, along with revenue from tourism and the Suez Canal, for foreign currency. Of the three, only tourism recorded positive growth in the first half of the fiscal year, according to the central bank. That indicates that inflows to the Arab world’s most populous country are still below the levels they were at before the global recession.

Foreign direct investment in Egypt peaked at just above US$13 billion in the fiscal year that ended in June 2008, before falling 39% the following year.

The central bank said that the country’s current-account deficit narrowed 49% to about US$1.3 billion in the first half of the fiscal year, helped by a decline in imports and exports. - Bloomberg