Investors bet on Egypt’s future

Mr El Sisi received German backing last week. But what the markets say matters more.

Egyptian President Abdel Fattah al-Sisi (L) and Hungarian Prime Minister Viktor Orban (R) smile during a signing ceremony in the Parliament building in Budapest, Hungary. Zoltan Mathe / EPA

When Egypt’s president Abdel Fattah El Sisi left Berlin last week, he did so with a significant political vote of confidence. Germany has been critical of some of the country’s domestic policies – particularly the sentencing to death of political opponents – but all of that was brushed aside by the German chancellor Angela Merkel. The talk was all of partnership and cooperation.

For Egypt, positive relationships with other powerful countries matter. But what matters more is a vote of confidence in Egypt’s economy. And that, in the past few weeks, has been abundant.

The headline deal in Germany was an €8 billion (Dh33bn) contract with Siemens to increase power generation capacity in Egypt. It says something that this was the largest deal the German company has ever struck.

But an arguably more significant moment came on Thursday when Egypt conducted its first international bond sale for five years. The last, in 2010, came before the upheaval of the Arab Spring, when the main concerns on the minds of foreign investors were the high percentage of state finances allocated to subsidies and the question of who might succeed then-president Hosni Mubarak. This time around, there are plenty of other concerns, but the investors appeared willing to give Mr El Sisi’s government the benefit of the doubt. The country sold $1.5 billion of 10-year bonds and at a better yield than expected. The bonds drew more than $4.5bn in investor demand.

That sale, about two months after a global credit ratings agency upgraded outlook of Egypt and some of its major banks, is a significant fillip to the Egyptian government. Mr El Sisi has pushed the idea that stability matters above all else – and he has been backed in that mission by both the Gulf states, the US (more quietly) and now international investors. Piece by piece, Mr El Sisi is seeking to set Egypt on the road to recovery. His plan now has international backing and the economic confidence to ensure that this comes to pass.