Egyptian President Abdel Fatah al-Sisi ratified a new law No. 177 for 2018 to establish a new sovereign fund named “Egypt Fund”. The law was published on Sunday by the official Egyptian Gazette.
The Egypt Fund will have an authorized capital of LE200 billion ($11.2 billion) and will start with paid-in capital of LE5 billion, 20 percent of which will be injected by the government when it is set up.
Partnering with the private sector, the fund will seek to attract domestic and foreign investment and build on economic reforms embarked by Egypt in 2016 that includes the flotation of the currency, cutting energy subsidies and introducing new taxes to cut the budget deficit.
In November 2016, Egypt clinched a $12 billion loan from the International Monetary Fund (IMF). Foreign reserves have been increasing since then. Reserves were only $19.041 billion at the end of October 2016.
Egypt’s foreign reserves reached $44.03 billion in April 2018 for the first time in history, compared to $42.61 billion at the end of March, according to the Central Bank of Egypt (CBE). Foreign currencies’ balance in the country’s international reserves increased to $40.5 billion in April, up from $39 billion in March, increasing by LE 23 billion in one month, the CBE said. The reserves are expected to further grow over the coming two years to reach $50 billion.
Egypt’s growth has continued to accelerate during 2017/18, rising to 5.2 percent in the first half of the year from 4.2 percent in 2016/17. The current account deficit has also declined sharply, reflecting the recovery in tourism and strong growth in remittances, while improved investor confidence has continued to support portfolio inflows. In addition, gross international reserves rose to $44 billion by end-April, equal to 7 months of imports.
A number of businessmen launched an initiative to support Egypt following the events of 30 June under the 306306 Fund, headed by Farouk El Okda, former governor of the Central Bank. The fund amassed close to EGP 1bn, including a donation of EGP 300m from the armed forces.
The idea of creating funds or opening accounts to support the economy flourished following the 25 January Revolution, including the 2512011 account, as well as the 333-333 Egypt Renaissance account.