Egypt’s government is considering offering real estate in dollars to Egyptians abroad or interested foreign buyers. Moving forward, the plan for Egypt is to collaborate with real estate development companies from the private sector.
This was announced by the Presidency of the Council of Ministers in a statement published on Facebook Thursday evening. Prime Minister Mostafa Madbouly reviewed a proposed initiative to enhance real estate exports. This sector is one of the important sources of foreign exchange for Egypt.
The statement added that the initiative will include properties belonging to Egypt’s real estate developers in the private sector. Moreover, the government will be providing a number of incentives to ensure the success of the initiative.
Breakthrough in the Egyptian Stock Exchange
Madbouly explained that the initiative would achieve a major boom in the performance of the Egyptian Stock Exchange. It would accelerate the growth of projects in the New Administrative Capital and other new cities. Moreover, the initiative is aimed at strengthening and stimulating demand for local real estate and attaining large U.S. dollar flows. The terms of the initiative will be agreed upon in preparation for its formulation and announcement.
Notably, public finances in Egypt are suffering from a hard currency shortage crisis. It increased in severity as of early last year after about $20 billion of hot money left the Egyptian markets. Moreover, major central banks, led by the Federal Reserve, raised interest rates to a two-decade high. That is with the aim of curbing inflation sparked by the Ukraine war. These developments compounded Egypt’s foreign currency situation.
Egypt’s foreign reserves
Based on the latest figures issued by the Central Bank of Egypt, the country’s net foreign reserves amounted to $35.102 billion in October. That compared to $34.97 billion in September which marks an increase of $132 million.
According to the bank’s data, this is the first time Egypt’s foreign reserves have exceeded $35 billion since May 2022.
The conflict between Israel and Hamas made the economic situation even more challenging. This prompted the International Monetary Fund (IMF) to consider the possibility of increasing its loans to Cairo. This falls under the Egyptian rescue program.
Talks about Egypt’s debt
Cairo had held talks with the IMF about a possible increase in its loan of $3 billion, to more than $5 billion.
Meanwhile, a Bloomberg report revealed a European plan to support Egypt worth about 10 billion dollars, with talks on debts.
The Managing Director of the IMF, Kristalina Georgieva, told Reuters recently that the Fund is “seriously studying” a possible increase in Egypt’s rescue plan. Georgieva made these statements on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in San Francisco.
She pointed out that Israel’s war against Hamas “not only destroys” Gaza’s population and economy but also presents difficulties for neighboring countries. This includes Egypt, Lebanon, and Jordan, through the loss of tourism and high energy costs.
Read: Trade between the GCC and Egypt exceeds $34 billion in 2022
Reducing Egypt’s credit rating
Moody’s, Fitch, and S&P Global reports lowered Egypt’s credit rating in light of increased risks to Egypt’s external financing. Egypt is also facing rising debt to unprecedented levels.
Fitch stated that the war between Israel and Hamas “poses significant negative risks to tourism in Egypt.”
Egypt was hoping to expand its tourism sector annually by 30 percent. However, it is now witnessing cancellations of about 10 percent of total reservations.
External financing
However, Egypt’s Minister of Finance, Mohamed Maait, said that the Egyptian government has identified sources of external financing. The amount totals to around $4 billion, which Egypt will need until the end of the current fiscal year. Thus, Egypt continually aims to diversify international markets, especially after its success in returning again to Japanese markets. It is implementing the second international version of Samurai bonds worth 75 billion Japanese yen, or about half a billion dollars. The bonds are priced for a periodic return of 1.5 percent annually, with a 5-year maturity. Egypt also issued sustainable international bonds on the Chinese financial market (Panda). Thus, they were allocated to finance projects worth about 3.5 billion Chinese yuan or half a billion dollars.
Moreover, the volume of Egypt’s external debt rose to $164.7 billion by the end of the 2022-2023 fiscal year. This includes short-term debt of about $28.15 billion, deposits, and loans. The debt also includes credit facilities worth $9.4 billion, requiring $83.7 billion of it to be repaid over the next three years.
For more news on the economy, click here.
