Egypt's growth taking a tumble
Egypt’s economic growth rate in the second quarter of the current 2012/13 fiscal year may be 0.2 percent lower than the previous quarter, Planning and International Cooperation Minister Ashraf El-Arabi said Monday.
In the first quarter, Egypt's economy grew by 2.6 percent. El-Araby's comments suggest that the economic growth rate for the October-December 2012 period could be in the neighbourhood of 2.4 percent.
At a meeting with the Japan International Cooperation Agency, El-Arabi said that Egypt's total economic growth rate was expected to reach 3 percent by the end of the current fiscal year – lower than his earlier estimate of 3.5 percent.
In the first quarter of 2012/13, Egypt's economic growth shrank by 21 percent compared to the previous quarter (ending June 2012) due to domestic political uncertainty, which has served to spook foreign investors.
Economists, along with many government officials, say that a long-awaited $4.8 billion loan from the International Monetary Fund (IMF) would lure foreign investment back to Egypt.
Loan talks with the IMF are expected to resume soon and an IMF technical team is slated to visit Egypt in coming weeks, El-Arabi recently told reporters.
"Around $9 billion in aid, pledged to Egypt from the European Union and the African Development Bank, will be unlocked once the IMF loan deal is signed," the minister stated.
In January, European Council President Herman Van Rompuy announced that a proposed $6.5 billion loan from the EU would only be granted once the IMF sealed its loan agreement with Egypt.
The Egyptian government had hoped to raise Egypt's net foreign reserves to $19 billion via the aforementioned foreign aid packages, but this plan has been delayed due to the suspension late last year of IMF loan talks.
Egypt's foreign reserves currently stand at $13.6 billion following a $1.4 billion drop in January, according to central bank data.