Egypt's economic growth more than doubles in quarter

Foreign borrowing and direct investment helped to drive 4.9 per cent year-on-year rise

A general view of n Cairo, Egypt. Growth has picked up in the past quarter. Mohamed Abd El Ghany / Reuters

Foreign borrowing and direct investment helped drive Egypt's economy up 4.9 per cent year-on-year in the fourth quarter of its 2016-17 fiscal year, a Finance Ministry report showed on Wednesday.

It compared with a 2.3 per cent year-on-year rise in gross domestic product in the fourth quarter a year ago. The fiscal year runs until the end of June.

Egypt last November signed a US$12 billion three-year IMF loan agreement tied to sweeping economic reforms such as tax hikes and subsidy cuts that the government hopes will lure back foreign investors who fled after the 2011 uprising.

Foreign direct investment in the 2016-17 fiscal year jumped 27.5 per cent from a year earlier, the report showed.

Egypt's foreign debt meanwhile rose 38.4 percent, to $73.9bn at the end of March 2017, up from $53.4bn in March 2016.

The cash-strapped country has been borrowing from abroad to fund its budget deficit and boost its balance of foreign reserves after a years-long dollar shortage sapped its ability to import and slowed economic activity.

The budget deficit during the first nine months of 2016-17 narrowed to 9.5 per cent of GDP from 11.5 per cent in the same period a year earlier, the report showed.

The government has so far received an initial $4 billion tranche of its IMF loan and sold $bn in five, 10 and 30-year Eurobonds this year, returning to international markets for the first time since 2011.

This borrowing has helped push up Egypt's foreign reserves, which hit a record $36.04bn at the end of July 2017.

Reserves stood at just $19.04bn in October, just before the central bank floated the pound currency and the government kicked off its IMF-backed reform programme.

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The country is also making headway in its energy sector.

The Egyptian oil minister Tarek El Molla has this week signed three oil and gas exploration deals for 16 new fields in the Western Desert worth at least $81.4 million in total with Royal Dutch Shell and the US-based Apex International Energy.

The petroleum ministry said the first deal would see Shell invest $35.5 million, and the other two would see Apex, which is operating in Egyptfor the first time, invest a combined $45.9m on two projects.

Egypt, which used to be a net energy exporter, has become a net importer in recent years as consumption has increased while production has fallen.

The government has been on a drive to lure back foreign investors to its energy sector in an effort to boost public finances.

In December, Egypt accepted six bids for oil and gas exploration worth up to $200m.