Central Bank confirms Egyptian foreign exchange reserve dip

Investment Minister Osama Saleh says Egypt is facing 'major economic problems' Egypt's foreign exchange reserve has dropped by $1.4bn at the end of January 2013, clocking in at $13.6bn, Egypt's Central Bank said on Tuesday. The current reserve is down from $15bn at the end of December 2012 and covers only three months of good imports.
Planning and International Cooperation Minister Ashraf el-Arabi said studies have shown that the budget deficit is one of the leading causes of the rise in prices and the drop in the foreign-exchange reserve. He explained that a deficit means that demand exceeds supply, increasing prices.
Speaking at an economic symposium at the Cairo International Book Fair, he added: "The problem of the budget deficit is chronic, and one we have had for years and failed to tackles with the necessary seriousness. We must increase income and investment, work on unnecessary expenditure where we could make savings and try to take loans.
The minister also said Prime Minister Hisham Kandil's brief holds "pressing challenges and problems" in terms of confronting the seriously dwindling growth and investment rates.
"The investment rate over the year 2011 to 2012 was 15 percent, which is very low, and it is the only way to increase job opportunities and incomes. We must focus on the area of investment and employment over the coming period."
He added: "The unemployment rate is almost 13 percent, rising to 30 percent among 15 to 20-year-olds. It is also especially concentrated among higher education graduates, which is a grave indicator of the suitability of our education in terms of the job market."
Investment Minister Osama Saleh, said there were "major economic problems" that have led to Egyptians not seeing an improvement. Among the most crucial of these factors, Saleh said, are the continuing low growth rates at 2.6 percent in the current quarter, the growing budget deficit and the increase in unemployment rates to 12.6 percent, which he said was "one of the highest rates."
According to Saleh, the government hopes to exceed a 3 percent growth rate by the end of the current fiscal year. In the end, he said, these rates would not enable an increase in job opportunities and improved living standards.
Saleh also revealed that investment rates were "very low" at 11 percent of the GDP and said the rate should exceed 22 percent "before we can talk about beginning to achieve good growth rates."
This, Saleh said, does not mean we have to rely solely on foreign investments, adding "safe national investment must be the locomotive of development and a start to attract foreign investors to Egypt."
According to Saleh, the target investment goal for the current fiscal year is 276bn Egyptian pounds ($41bn), where the private sector's share would be 170bn Egyptian pounds ($25bn). He also said the plan includes "the beginnings of some Egyptian investments."
Saleh stressed the government's commitment to removing obstacles before investors by facilitating the acquisition of lands and permits. He also revealed that 336 projects in various provinces have been put up for investment.