Interview: Hisham Ramez
What short-term solutions are you considering to help spur economic growth?
HISHAM RAMEZ: It is the role of all Egyptians to be serious about the current position and the economic situation that we are in. There is a need for constructive criticism, dialogue and cooperation. We have a tremendous potential with the right fundamentals for this economy to grow, but we have to work together and look to the future good of the country.
Before attracting foreign direct investment, for example, we must address the concerns of our local investors. We have to respect domestic investors and businessmen, because local investors have the know-how, the experience and the emotional attachment to the market. We are working on addressing the concerns they have brought to us; once local investors have regained confidence to reinvest in Egypt again, foreign direct investment will come back. One of the ways we are trying to stimulate local investment is by taking a closer look at small- and medium-sized enterprise (SME) financing. We are working to encourage the banking sector to play a bigger role with SMEs .
How crucial is the IMF programme for Egypt, given the bilateral grants from other countries?
RAMEZ: We sincerely appreciate the financial support extended by our neighbouring countries, but it will not replace our economic reform agenda under the IMF programme. Deposits are welcomed and are helping us in the short term. However, over the long term, the IMF programme is a must and it will help us bring back investor confidence and see a return of international organisations to Egypt.
We will continue fine-tuning our programme with the IMF, in order to have the right programme that would be sustainable to implement and help us to cut the budget deficits to the levels that we are targeting. We are hopeful to reach a deal as soon as possible. Of course, it would be more difficult to achieve our targets outside of the IMF programme. However, we are confident that the IMF negotiations will be a success because of the strength of our outlined reform agenda. So, our immediate plans are to continue with the required reforms because these are a must.
How long do you expect to keep stabilising measures, such as currency restrictions, in place?
RAMEZ: There are no restrictions for any foreign investors today, including on business transactions. The only control applied is on outbound Egyptian individuals and investments that are capped at $100,000 transfers. Once the domestic situation settles, this limit will be removed. We also added legislation dictating that any new investments coming into Egypt (whether in financial or real assets) are exempt from restrictions on profit repatriations irrespective of their size.
We are gradually trying to remove all types of currency movement limitations as much as possible, but to reiterate: there are no restrictions on any foreign investors in Egypt. Today the problem for foreign investors is the unavailability of foreign currency.
We are working very hard on this issue, and I am certain that once confidence returns and the economy expands, normality will resume. We expect this to happen sooner rather than later.
To what extent is there room to address the parallel foreign currency market?
RAMEZ: It is not a question of regulating or closing the unofficial parallel market but rather one of having supply of foreign currency meeting demand. The parallel market is a very small market driven by rumours. However, we will not intervene with our limited currency reserves to shut down the parallel foreign currency market. Rather, it will come in a natural way: there will not be a parallel market once confidence returns and the economy recovers. The year 2013 is a very important and crucial one for us to achieve our targets.
Taken from an interview session hosted by the American Chamber of Commerce in Egypt, April 2013.
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