Dubai: Egypt plans to issue $1.5 billion (Dh5.5 billion) worth of bonds in June in its first tranche, to which it seeks investments from the UAE government and other GCC countries, its minister of investments said on Monday, as the country sets the stage for economic reforms to improve the business climate.

“We need some help in the form of investments by participation in sovereign debt and infrastructure, and we will need supportive investments,” Ashraf Salman, investments minister told journalists on the sidelines of a conference. The country plans its second tranche of the bond issue in September. However, Salman didn’t disclose the size of the issue.

The country is recovering from political instability and is seeking investments from the private sector even as it plans to invest in education and health care.

“The budget deficit to GDP [Gross Domestic Product] was 15.2 per cent, the poverty rate was about 25 per cent, the GDP growth was below 2 per cent and foreign reserves were deteoriating month after month. This was the case before the support of Gulf countries and the serious economic reform plan that was set [in motion] by the Egyptian government,” Salman said.

Egypt has received up to $23 billion in the past 18 months from the UAE, Saudi Arabia and Kuwait in the wake of president Mohammad Mursi’s ousting. This has been in the form of oil shipments, loans and grants, along with deposits in the central bank.

The economic reform measures were built on three major pillars — structural adjustment of fiscal consolidation, investments in mega-projects to stimulate growth and measures to make the investment climate more attractive through legislation in labour, mining, among other sectors.

“The economic reform programme is a unique one because it is not dependent on resources extracted like oil and other products or the Asian model to produce low-cost products. It’s an inclusive economic growth model,” Salman said.

Double FDI

Foreign direct investment (FDI) could double to $8 billion in 2014-15 compared to $4 billion in the previous year, and Cairo hopes to cut its budget deficit to 10 per cent of the GDP compared to 15 per cent in the previous year, Salman said.

The country has devalued its currency in order to help address the problem of a shortage of hard currency, which [makes it] difficult for foreign portfolio and industrial investors to repatriate profits.

“We are moving in right direction and we are expecting an increase in foreign reserves,” which were at $15 billion, Salman said.

He expects changes in the capital gains tax to create a better picture of how the tax can be deducted.

“We are making changes that will [create a] much easier way of deducting it, and this will be announced in coming two weeks,” Salman said.

The country currently charges 6 per cent capital gains tax.

“We are studying [the] income tax rate for the coming 10 years. We would not use tax incentives to attract investments,” he added.