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Flotation marks new beginning for Egyptian economy - PwC

Flotation marks new beginning for Egyptian economy - PwC
Locally manufactured goods can substitute imports to local and foreign markets - (Photo Credit: Arabianeye-Reuters)

Cairo - Mubasher: The Central Bank of Egypt’s (CBE) decision to float the Egyptian pound was a step in the right direction towards a free and growing economy, according to a report by PricewaterhouseCoopers (PwC) Middle East, published Wednesday.

“Positive influences on foreign and local investments coupled with increased global competitiveness are among the key long-term effects that are likely to be felt across the country,” PwC said in its latest report on the Egyptian economy, entitled “EGP devaluation: economic reforms mark the start of a new beginning”.

“The current economic reforms, in particular the draft investment law and the flotation of the EGP, mark the start of a new era for Egypt. Now is the time to expand your businesses and the time for foreign companies to invest in Egypt,” said Maged Ezz Eldeen, Egypt senior partner and deals leader at PwC Middle East.

“We are optimistic about Egypt’s long-term economic prospects and hope that this report will help shed some light on the positive effects of the ongoing economic liberalisation being undertaken by the Egyptian government,” he added.

“Agreed reforms include a set of tax and non-tax incentives, currently under consideration, for the benefit of foreign investors along with a clear roadmap for profit repatriation,” Ezz Eldeen indicated.

“Now a more competitive destination for investors and tourists alike, an inflow of foreign currency and foreign direct investments (FDI) will serve to refuel the economy in the long-term,” said Maye Ayoub, Egypt deals partner at PwC Middle East.

“There is tremendous potential for local manufacturers in both local and international markets post-flotation, given that Egyptian-made products can now be competitively priced abroad,” Ayoub added.

This positive effect is of course contingent on the stabilisation of the EGP against the US dollar, which PwC argues is only a matter of time.

That is, until speculation and volatility settle down and investors obtain a clearer picture of how the flotation will evolve.

PwC also expects exports to pick up given the exploration of new gas fields and competitive gains from the devaluation, as well as a more attractive investment climate.