NOVANEWS
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Egyptian President Abdel Fattah al-Sisi speaks at the Egypt Economic Development Conference in Sharm el-Sheikh.
Egypt hopes to revive its economy with a mix of austerity for the country’s poor, and mega-projects for foreign investors to sink their teeth into.
Egypt’s government announced Friday plans to build a new capital from scratch, as the country tries to woo foreign investors to boost its ailing economy.
“We are talking about a global city. Our vision is that it is of the utmost quality,” housing minister Mostafa Madbouli told investors during a key business conference. Held in the resort town of Sharm el-Sheikh, the conference is aimed at coaxing investors back to Egypt, after years of political unrest.
According to Madbouli, the yet to be named city will be roughly the size of Singapore, and mostly serve as a city for diplomats and government buildings. He also explained the city will take the strain off Cairo’s infrastructure in decades to come, as the current capital’s population of 12 to 22 million is expected to double in the next 40 years.
The massive construction project is expected to take between five and seven years to complete, and is one of a handful of mega-projects aimed at stimulating the economy. Last year the government announced plans to invest US$8 billion in overhauling the Suez Canal.
Details of how the project will be financed haven’t been released. However, the government has estimated the city will cost US$45 billion – a full one sixth of the country’s 2013 GDP. As much as 80 percent of the government’s budget already goes into covering fixed costs that limit the government’s ability to finance new investment, such as the public payroll, consumer subsidies and debt.
Meanwhile, annual economic growth has limped at around 2 percent since 2012, and the government is already facing a deficit of around 9 percent. Foreign investment has also plummeted since the revolution. In 2014, foreign direct investment (FDI) was around US$4 billion. Comparatively, between 2007-08 FDI was around US$13 billion.
However, the government’s plan to kickstart the economy with a combination of harsh austerity measures and foreign-funded development plans has received approval from international financial institutions such as the International Monetary Fund, and the United States. While austerity is mostly directed at gutting subsidies aimed at protecting Egypt’s poor, the development projects are intended as a honeypot for international investors. The government said it believes the construction of the new capital alone is expected to create 1.5 million jobs, in a country where around 3.5 million people are unemployed.
On Friday, U.S. secretary of state John Kerry urged the international business community to invest in Egypt.
“We will work with you to secure the ambitious goals you have laid out,” Kerry stated.
This week’s investor conference secured US$12 billion in investments from Gulf nations, and a US$5 billion deal over five years with Italian oil firm Eni.
“We are talking about a global city. Our vision is that it is of the utmost quality,” housing minister Mostafa Madbouli told investors during a key business conference. Held in the resort town of Sharm el-Sheikh, the conference is aimed at coaxing investors back to Egypt, after years of political unrest.
According to Madbouli, the yet to be named city will be roughly the size of Singapore, and mostly serve as a city for diplomats and government buildings. He also explained the city will take the strain off Cairo’s infrastructure in decades to come, as the current capital’s population of 12 to 22 million is expected to double in the next 40 years.
The massive construction project is expected to take between five and seven years to complete, and is one of a handful of mega-projects aimed at stimulating the economy. Last year the government announced plans to invest US$8 billion in overhauling the Suez Canal.
Details of how the project will be financed haven’t been released. However, the government has estimated the city will cost US$45 billion – a full one sixth of the country’s 2013 GDP. As much as 80 percent of the government’s budget already goes into covering fixed costs that limit the government’s ability to finance new investment, such as the public payroll, consumer subsidies and debt.
Meanwhile, annual economic growth has limped at around 2 percent since 2012, and the government is already facing a deficit of around 9 percent. Foreign investment has also plummeted since the revolution. In 2014, foreign direct investment (FDI) was around US$4 billion. Comparatively, between 2007-08 FDI was around US$13 billion.
However, the government’s plan to kickstart the economy with a combination of harsh austerity measures and foreign-funded development plans has received approval from international financial institutions such as the International Monetary Fund, and the United States. While austerity is mostly directed at gutting subsidies aimed at protecting Egypt’s poor, the development projects are intended as a honeypot for international investors. The government said it believes the construction of the new capital alone is expected to create 1.5 million jobs, in a country where around 3.5 million people are unemployed.
On Friday, U.S. secretary of state John Kerry urged the international business community to invest in Egypt.
“We will work with you to secure the ambitious goals you have laid out,” Kerry stated.
This week’s investor conference secured US$12 billion in investments from Gulf nations, and a US$5 billion deal over five years with Italian oil firm Eni.
