In the face of sluggish growth, high unemployment and inflation as well as a bloated deficit, Egypt's minister of finance, Hani Qadri Demian, has insisted that confidence could return to the country's economy through much-needed reforms, especially to its tax system. This was the message when he spoke at the US Chamber of Commerce in Washington, DC, on April 11. Mr Demian and other business leaders addressed a small crowd, while a handful of protesters gathered outside, one of whom managed to burst on stage during the luncheon.

Not to be derailed, Mr Demian guaranteed that while Egypt continues to face turmoil, the country would be ruled under a constitution that is in line with both European and US law. It will be some time before Egypt can put any new policies in place, however, and investors will have to wait until after the country’s presidential elections, which are due to be held in late May, before an amended constitution can be established.

Mr Demian said that Egypt is facing “a new era” and that “confidence” would be built into its economy. This confidence, he said, would come in the form of reforms. The largest of these would be to Egypt’s tax system, specifically its value-added tax. “This will show we can grow Egypt’s tax basis in a fair way,” he said.

Mr Demian admitted that Egypt is facing slow growth, relatively high inflation, unemployment of about 14% and a budget deficit of about 12% of its GDP. “This dictates the need to boost economic productivity,” he said. The finance minister also emphasised the country’s dire need for FDI, saying: “It’s critical for our people.” 

When asked what industry sectors are best suited for FDI, he replied: “The energy sector is the priority. We need to assure sufficient energy for investors.”

Currently, Apache Corporation, an oil and gas exploration concern headquartered in Houston, Texas, is the largest US investor in Egypt. “We have been doing business in Egypt for 20 years,” said G Steven Farris, chairman and CEO of Apache and chairman of the US-Egypt Business Council.

Telecommunications, transportation and freight were also cited by Mr Demian as key areas for investment. “There are major opportunities to invest in Egypt’s telecom infrastructure, as well as ports and logistics across the entire east coast of the Suez,” he said. “There are also opportunities to launch big projects for the reduction in the consumption of energy.”

The importance of the International Monetary Fund (IMF) programme was also stressed by the finance minister: “The IMF has been a supportive partner, especially during 2011 to 2012.” He added that discussions with the IMF, which have been under way for some three years without success, “have never been easy” and were interrupted by Egypt’s political polarisation. “A deal cannot be focused until Egypt has an elected president and parliament,” said Mr Demian. But, he stressed that the programme was essential in helping Egypt grow its economy.

Khush Chaksy, vice-president of Turkey, the Middle East and north Africa at the US Chamber of Commerce, further emphasised this point. “An IMF agreement would provide a stamp of approval for international investors,” he said.

Egypt currently benefits from a free-trade agreement with the EU, the Greater Arab Free Trade Area, and the Common Market for Eastern and Southern Africa. There is also talk of a free-trade agreement between Egypt and the US. But Hisham Fahmy, CEO of the US Chamber of Commerce in Egypt, clearly stated that: “This [was] just talk. Its prospects are nil. What’s important now is keeping the discussion going.”