Egypt’s economic summit fails to attract big Gulf money

File photo shows Egypt’s President Sisi smiling as volunteers take a selfie with him during the closing session of Egypt Economic Development Conference in Sharm el-Sheikh. (Reuters)

This year’s economic summit in Egypt, intended to bring in large amounts of much-needed foreign investment, failed to score a similar windfall seen at last year’s much-publicized event.

Last year, the conference, set in the resort city of Sharm al-Sheikh, brought in $12 billion in pledged investment from oil-rich Gulf states.

This year’s event, entitled “Egypt the Future,” did not seem to lead to any large announcements of new deals or projects.

Instead, Egypt announced on Monday that Egypt’s President Abdel Fattah el-Sisi had a meeting with the country’s prime minister, central bank governor, and other ministers “where he ordered to form a team for following up the results of the Economic Conference and the progress in execution.” Figures were not made available.

But after the conference which took last year, Egypt formed ministerial committees to follow up with the executions of the deals signed, reportedly said to be $120 billion from 112 different countries who participated in the summit.

Asked why the results were not published and made public, Jamal Haykal, a professor at the Arab Academy for Science and Technology, told Al Arabiya English said it is “hard” to tell where the money had raised this year had been invested.

He said “the final figures are not available, and when these numbers are revealed, things will be clearer,” adding that “transparency is important” but not amid “this not so normal [security] situation,” citing the downing of the Russian airliner in October over Sharm el-Sheikh last year as example.

The biggest victim of Egypt’s economy has been is its key tourism sector, which saw its revenues slumping 15 percent year-on-year to $6.1 billion in 2015.

Mustafa Basyouni, in an article published by the local Assafir newspaper, described the conference almost as a “lifeline” for Egypt’s economy, which has been ailing amid political instability which started when President Hosni Mubarak was toppled in 2011.

He said the much publicized conference expected to see more than $120 billion injected in Egypt’s economy, “enough to cause an economic leap” or at least “postpone an economic crisis for years.”

Regionally, there have been no detailed reports of what has the Gulf money injected last year has achieved, amid speculations that the billions of dollars from the Gulf states are not enough for the cash-strapped country.

It is also not clear how much money in total Egypt received from the Gulf.

On the first day of the conference last year when a proposal for a new Egyptian capital city was announced, it saw Kuwait, Saudi Arabia and United Arab Emirates pledging $4 billion each, totaling to $12 billion.

Meanwhile, Reuters reports $20 billion aid as given to Cairo by its powerful Gulf allies. But it is not clear whether the money pledge during the conference is part of the aid.

“With the current situation, [borrowing money from the IMF] might be plausible,” Haykal, told Al Arabiya English.

“The Gulf itself has retreated in its efforts to help Egypt,” he added, citing dwindling low oil prices “pressuring” the Gulf states.

In mid-January, oil prices fell below $30 a barrel, a figure not seen for 12 years. While prices rose slightly afterward, some observers claim that “the oil-price rally that began in mid-February will “almost certainly collapse.”

However, Riyadh-based journalist Salahuddin Khashogji said “even with the dwindling oil prices these days…the Gulf states won’t pledge any additional support to Egypt,” citing different political views.

“The Gulf stance is obvious regarding Syria, Iran, Yemen, and with Russia, but we find there is a different point of view harbored by Egypt in these files. Therefore, I don’t expect any additional support or any similar upscale conference like Sharm el-Sheikh [supported by Gulf states] like last year,” he added.

On Monday, Egypt’s central bank devalued the pound and said it would shift to a more flexible exchange rate regime. The move caused the stock market to jump by 5 percent, raising expectations that the country’s dollar-starved banking system could be resolved.

Some observers say that Egypt has not pursued real political reforms to attract more foreign investors in spite of cutting subsidies to fuel and reducing taxes for investors.

Egypt’s foreign exchange reserves have fallen from more than $36 billion in 2010 to about $16 billion in 2016.

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Last Update: Wednesday, 20 May 2020 KSA 09:50 - GMT 06:50
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