Experts and analysts expect that the Egyptian bond funds are in danger, due to Egypt’s participation in the war on Libya, and water security concerns due to the Renaissance Dam, in addition to the faltering tourism sector.
Although Egypt has attracted the interest of foreign investors in the past three months, the lure of yield hides a weak economy and severe political risks. This is confirmed by the decline in the Cairo Stock Exchange for several days during this month after the Egyptian parliament gave General Abdel Fattah al-Sisi the green light to intervene militarily in Libya.
The deployment of the armed forces in Libya results in increased military expenditure, while the Coronavirus causes a deficit in the Egyptian budget. The second danger is that Egypt has yet to reach an agreement with Ethiopia regarding the Renaissance Dam, which threatens the main water resource. The third danger comes in the tourism movement. Despite the reopening of the airports in July, experts expect that the normal occupancy rates will not return before March or April of next year.
The government expected that the growth rate would reach 3.5% in the fiscal year 2020-2021 that started in July, but Minister of Planning Hala Al-Saeed said in May that growth could decline to 2% if the Coronavirus crisis continues until the end of the year. Experts believe that Egypt is facing difficulties in attracting foreign investment due to the bureaucracy and the monopolizing of companies owned by the armed forces of most sectors.