Restoring stability ticket to regaining investor confidence
Banks prove able to grapple with crises as Gulf aid supports foreign currencies
The current economic situation is in dire need of security and stability and of regaining confidence of foreign and local investors, which could be achieved with a huge influx of tourists, exports and remittances from Egyptians living abroad, a top banking official said recently.
Hassan Abdel-Meguid , Managing Director of Societe Arab International de Banque (SAIB), said Egypt’s continued economic growth is a miracle, especially since the country has witness two political upheavals in less than three years.
Abdel-Meguid called on the government to control the political situation, to be firm and decisive in order to maintain the country’s position, and to take the necessary steps to encourage and attract investment – foremost of which are meeting commitments to its agreements with investors, reaching equitable settlements with them, and removing the dead hand of the state on faltering enterprises.
Abdel-Meguid said the $4.9 billion loan by the International Monetary Fund (IMF) is of little value compared to the $12 billion from Saudi Arabia, Kuwait and United Arab Emirates (UAE), which supported foreign currency reserves to meet Egypt’s obligations abroad.
The main purpose of the IMF loan up, however, but is to assure that Egypt has an integrated economic reform program and show that the economy is on the right track. The IMF loan is regarded as a guarantee of trust, helping Egypt to borrow from foreign institutions and regain foreign investor confidence.
Abdel-Meguid added that the banking sector has played an important role in supporting the Egyptian economy in general, and within the last three years in particular – amid increasing risks – the entire the market, by granting more facilities, not refusing to finance any sector and supply foreign currency to import strategic commodities, expanding investment in government debt to narrow the budget deficit, since the government has faced many difficulties in foreign borrowing.
Abdel-Meguid highlighted the vital role of the banking sector in social responsibility, which individual banks have played for many years, but the now banks are being called upon to help support the Egyptian economy and to bring it out of crisis.
The Federation of Egyptian Banks (FEB) has agreed to take on a project to develop slums nationwide during the next few years, Adbel-Meguid said.
Prime Minister Hazem el-Beblawi, Minister of Local Development Adel Labib and Cairo governor, Galal Said have been consulted to select slum areas that are in most urgent need of development, Adbel Meguid added.
It has been agreed to develop 15 slum areas in Helwan, 20 kilometres south of Cairo with an initial cost up LE200 million, he added.
The FEB has entered into an agreement with the engineering department of the armed forces and the Arab Contractors Company to develop these areas according to a specific schedule, he said.
Abdel Meguid went on to underline the importance of holding the Euromoney-Egypt international conference in the coming months with regard to boosting investment, but big-name financial and global financial investment must be present, as well as the economic group’s ministries to offer investment opportunities and declare that the country is encouraging investments everywhere.
SAIB’s loan portfolio is worth LE5 billion, while deposits exceed LE16 billion, and it is expected that SAIB loans will boost improvement of the economy and restore security, which in turn will leads to increased demand for bank loans.
SAIB is currently focusing on all the sectors which will reduce the trade deficit and labour-intensive enterprises, Abdel Meguid said.
Private loans by SAIB have surged by EGP540 million, of which car purchases accounted for the highest proportion at LE145million, followed personal loans at LE65million, he added.
Total SAIB investment has reached LE6.7 billion in many economic sectors, with LE7 billion in treasury bills and LE450 million in US dollar treasury bills, he said.
