Egypt’s Finance Minister Samir Radwan said the stock market will stabilize this week as the government makes 250 million Egyptian pounds ($42 million) available to buy shares, after the index dropped to the lowest level in almost two years following a seven-week halt.
The bourse has “surpassed all my expectations” and will not experience the same volatility as last week, Radwan said in an interview in London yesterday. Egypt’s benchmark EGX30 Index plummeted 12 percent on March 23 and 24 as the bourse reopened for the first time since a popular uprising that led to the ouster of President Hosni Mubarak.
“I was there, my heart dropped when I saw the EGX30 diving down,” Radwan said in an interview in London. “But when we reopened again I was reassured. Now we are doing well, and I’m assured through the chairman of the stock exchange that the demands to buy are very healthy.”
Radwan was in London for a conference promoting investment in Egypt after the revolt against the former regime caused companies to close and tourists to flee. The Finance Ministry now expects gross domestic product to grow between 3 and 3.5 percent this year, Radwan said, compared with a forecast of 5.8 percent before the revolution.
Egypt’s benchmark index rose the most in more than 15 months today. The EGX 30 Index (EGX30) climbed 5.3 percent, the most since December 2009, to 5,212.08 at the 1:30 p.m. close in Cairo.
Radwan told state-run television on Feb. 1, the day after he was appointed by Mubarak, that he would not lower government subsidies on fuel and food. These are equivalent to as much as 5 percent of GDP, widening the country’s budget deficit as food and oil prices rise.
“The present structure is highly inequitable, and doesn’t serve the people to whom the subsidies are directed,” he said yesterday. “But to touch it now would be suicide. We are regaining the confidence of the Egyptian people, and we would like that confidence to be on a solid basis.”
Subsidies amount to 6 percent of the income of the poorest 40 percent of the population, while adding 28 percent to the income of the top 20 percent, he said.
“We want a much more efficient system,” he said. “We are subsidizing five-star hotels, brick-making factories and so on. Is that fair?”
Radwan also promised there would be “no rolling back of reforms” to the country’s economy. “I am authorized to say this, coming to the London meeting, by the Cabinet, by the military council, to reassure everybody. If anything, we would like to go forward.”
Changes being considered include measures addressing the availability of land, licensing, bankruptcy and corruption, Radwan said.
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