Rate of interest cut activates bourse, market and reduce debts service burdens

Economists pointed out yesterday that the recent government's decision to cut the rate of interest on deposits and investment certificates will positively activate the bourse, local market and reduce the debt service burdens incurred by the general budgets.

Interest rates on investment certificates have been slashed by half percent as of Sunday.

Interest rates on post office savings would also be slashed by the same percentage.

A seminar on economic development yesterday called for steps to boost exports and increase the competitiveness of local products.

"There can never be political stability without economic development," Former Prime Minister Ali Lotfi told the seminar.

He asserted that Egypt's remarkable economic development over the past two decades has encouraged foreign investment.

It has been a bumpy ride, he said, referring to economic setbacks in the wake of the 1997 Luxor tragedy and falling oil prices.

Tourism and oil revenues are pillars of the Egyptian economy, along with Suez Canal revenues and expatriate remittances.

"The government has taken steps to boost exports and reduce imports," Lotfi said, calling for tougher measures to deter smuggling.

He also called for the government to lower interest rates, speed up the privatization process and lower customs barriers.

"These measures could creates more job opportunities, encourage foreign investment and activate the bourse," he said.

Former Minister of Economy and Foreign trade Mustafa EL Said addressed the seminar, affirming that while Egypt was facing economic hurdles, many countries were in the same boat.

"Egypt's economic infrastructure is not bad compared to that of other developing countries," he said, citing examples in Southeast Asia.

Economist Samir Tubar stressed the importance of specialized marketing companies, which are essential to improving distribution networks overseas.

He explained that these companies are familiar with consumer preferences abroad and have good connections with wholesalers.