Looking for a good investment? Consider Egypt: finance minister
Investors should view Egypt's political crisis as a buying opportunity and get in "sooner rather than later", the country's finance minister told CNBC on Thursday.
Ahmed Galal, the interim Egyptian finance minister, said Egypt's reform process would make it highly attractive to investors, despite the ongoing violence in the country, which saw former President Mohamed Morsi removed from power on July 3 and numerous people killed in the subsequent unrest.
"The combination of both a political process that is unfolding in the right direction and an economic reform process that gives some credibility and confidence, I think that combination is likely to make Egypt a very attractive place for investors," Galal said.
"All of them are most welcome to come, sooner rather than later. If I were an investor, I would come to Egypt now, not later, because this is the time when you establish a position, and then later when the economy recovers, this is when you will make your returns."
The interim government's transition plan includes parliamentary elections in around six months, but supporters of Morsi remain camped out in protest in Cairo, despite being urged by the government to move.
Galal said the country's difficulties were less severe than those facing the ex-Soviet bloc countries when they liberalized their economies in the 1990s, and forecast economic growth of 3.0-to-3.5 percent this year. The Egyptian economy expanded by 2.2 percent in the first quarter of 2013, sharply down from 5.2 percent a year before.
"The economic performance during all transitions everywhere, not just in Egypt, goes through a slowdown: inability to create enough jobs, investment is not taking place, imbalances are taking place. Also, budget deficits are growing, inflation is higher, and these problems are not new," he said. "All transitions go through these difficulties. In fact I would even argue that the difficulties the Egyptian economy is going through now are less severe compared with the problems encountered, for instance, in Eastern Europe, during the transition."
In "normal circumstances" Egypt's economy would grow by 4.5 percent-to-5 percent per year, Galal said, adding that economic progress was contingent on increasing political stability.
"The success of this government on the political front is probably the best way you can help this economy at this point. People want predictability; people want to know that things are going to fall into place the right way, so the more progress we make on the political front, the easier it is for the Minister of Finance," he said. "With confidence, investors can come back, tourists will come back, the economy will be activated, and the place will be more attractive, life will be better."