Egypt's business community pessimistic over IMF delay

Egypt's business community pessimistic over IMF delay
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Published December 13th, 2012 - 11:30 GMT via SyndiGate.info

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Investors saw the IMF loan as a lifeline for those looking to put their money into the Egyptian Stock Exchange
Investors saw the IMF loan as a lifeline for those looking to put their money into the Egyptian Stock Exchange
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CI Capital
,
Cairo Financial Holdings
,
Egyptian Exchange
,
Mahmoud Atallah
,
Agro Corp
,
Egyptian Stock Exchange
,
Hisham Tawfiq
,
Omar El Maghawry
,
Khaled Saba
,
People’s Assembly
,
Morsy government
,
International Monetary Fund

Experts in finance and investment banking agreed that the government’s recent decision to postpone the signing of the $4.8 billion IMF loan will have a negative impact on the country’s economic climate.

“Postponing the loan will deter investors seeking to do business in Egypt,” said CEO of CI Capital investment bank, Mahmoud Atallah, adding that the postponement of the loan “will have a direct effect on the disposition of investors regarding Egypt, whose decisions regarding where to invest and expectations of their potential returns are largely determined by a country’s perceived credit rating.” That being said acceptance of the IMF loan “creates confidence amongst investors regarding the political and economic state of a given country, regardless of the actual size of the loan.”

Hisham Tawfiq, board member for the Egyptian Exchange, and president of Arabeya Online for Securities Brokerage, stated that businesses view protracted negotiations with the IMF as a dangerous step backward that creates frustration amongst investors.

“Investors saw the IMF loan as a lifeline for those looking to put their money into the Egyptian Stock Exchange. There was therefore much enthusiasm about the acceptance of the loan, as it was viewed to be the foundation upon which many people would base their investment decisions,” said Tawfiq

Tawfiq added that postponing acceptance of the loan was not a shock considering the government’s latest decisions to freeze a series of tax hikes approved just a day before. Both decisions he said were a testament to the confused state the Morsy government.

On the other hand, Omar El Maghawry, director of private equity at Cairo Financial Holdings, said that postponing acceptance of the loan by one month was not long enough to have a serious detrimental effect on the country’s investment climate. He added “investors have already waited a long time to see this loan passed, and it was understood that certain political issues, such as the upcoming referendum on the constitution and the re-convening of the People’s Assembly, need to be settled before the loan was accepted.”

Khaled Saba, CEO of the Agro Corp Private Equity, said that postponing acceptance of the IMF loan has “further contributed to feelings of pessimism and boredom that have come to characterise investor’s attitudes towards Egyptian economy.” This is especially true, he said, considering the amount of time investors had already spent waiting for the loan to be approved.

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© Daily NewsEgypt 2012

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