CAIRO, Egypt (AP) — Foreign investment in Egypt is low as investors remain concerned about the slow pace of structural economic reform there, the U.S. Embassy in Cairo said in a semiannual report.
The midyear report, released last month, did cite some encouraging trends, including a decrease in the trade deficit, an improvement in the current account and a moderate increase in foreign exchange receipts — the last due largely to strong performance in tourism, finally recovering from the shock of a 1997 terrorist attack on tourists in Luxor.
"Less encouraging is the slowdown in structural reform over the last year, a development with negative implications for Egypt's economic competitiveness and growth," the report said. "Foreign direct investment and portfolio investment in Egypt remain at low levels, trends that can be viewed as indicators of investor concern regarding the government's commitment to structural reform."
The report said the government was taking steps to address the problems, including drafting "an ambitious array of economic legislation" to bring Egypt in line with international standards on intellectual property rights, lending and customs. The report also cited pledges to speed up privatization.
"The business and investor communities are watching closely to see if the government delivers in these and other areas," the embassy report said. "Its performance over the next six months will impact significantly on business confidence, investment levels and overall Egyptian economic growth."
Public Sector Minister Mokhtar Khattab told journalists last month the government would wrap up its privatization program by the end of next year, but said some "vital sectors" of the economy will continue to be under government control. Once-socialist Egypt launched reforms and privatization in earnest in the mid-1990s.
The United States and Egypt are close allies linked by several economic development and cooperation projects. As a result of the 1979 Egyptian-Israeli peace agreement signed at Camp David, the first peace agreement between an Arab country and Israel, the United States gives Egypt some $2 billion in annual aid.