In 2018, banks will continue to support the developmental plan of the government, according to Mohamed Abbas Fayed, CEO and managing director of Bank Audi Egypt.
What are your expectations for the targeted growth rates for 2018?
We expect that the Egyptian economy in 2018 is going to witness higher growth rates reaching 4.5 to 5% more than the prior year, due to the beginning of reaping the benefits of the government’s reform programme for the Egyptian economy implemented throughout the previous years.
What are the most important sectors that can significantly contribute to this growth?
Based on our point of view, the real estate investment and contracting sectors are expected to lead the growth rates, due to the near completion of several national projects, in addition to the energy and petroleum sectors, especially after the recent petroleum discoveries. The developmental projects in the agricultural sector are expected to contribute to boosting the growth rates as well.
What is the forecasted value of the EGP against the USD and what are the reasons behind the value?
Since November 2016, the exchange rate value has been determined through supply and demand mechanisms as a consequence of adopting the decision to float the exchange rate. Currently, the exchange rate gets lower in parallel with increasing the supply of foreign currency to meet demand. Based on our forecasts for the coming period, we expect the supply of foreign currency to increase and the value of national currency is going to increase against foreign currency as well. Such economic achievements take place through the expected economic growth, driven by foreign investments alongside strong recovery of the tourism sector within the next year.
What are your expectations for inflation trends and interest rates trends?
The current inflation rates are temporary as they are due to the impact of the decision to float the exchange rate. However, through following up the monthly indicators of inflation rates, one can notice the stability of these indicators since three months, as well as their decline downward.
We can also expect that this stability and decline in the inflation indicators will be ongoing within the coming months, due to the central bank’s pivotal role in facing inflation through its monetary methods. Such plan aims at driving the inflation rates to reach 13% (±3%) before the end of 2018 and Egypt is capable of achieving this rate owing to the expected growth in GDP as a result of the increase in the revenues of tourism, exports, and oil discoveries.
What is the role played by banks in supporting investors and increasing lending instead of investing in debt instruments?
Undoubtedly, the banking sector throughout the past years plays the biggest role in the process of economic stability, where banks currently own significant amounts of liquidity and enjoy strong financial positions.
Moreover, banks are required to be more engaged in funding small and medium enterprise (SME) projects, as these SMEs have the ability to increase the levels of local production and reduce the processes of importing, as well as providing and creating job opportunities to decrease the unemployment rates.
In your opinion, what are the most important sectors that banks will focus on more in 2018?
We expect that in 2018, banks will keep on supporting the developmental plan of the government, in addition to expanding the funding of vital economic sectors such as the energy, agricultural, industrial, servicing, and real estate investment sectors. Banks in 2018 will also expand the funding of large national projects, due to the fact that these projects are the main pillar in consolidating the national economy. Additionally, as aforementioned, banks this year will focus on supporting SME projects with their funding requirements.
