* $30 billion a year needed for investments, foreign
reserves - consultants
* Conference of donor countries, lenders to convene by end
* Consultants propose reform of state-run media, textile
By Mirette Magdy and Stephen Kalin
CAIRO, July 16 Western consultants helping Egypt
compile an economic reform plan say it needs at least $60
billion of investment to reach average GDP growth of 5 percent
by 2018 and the same amount again to bolster its foreign
reserves, senior officials said.
The Egyptian officials said the country would seek
dollar-denominated investments and loans from local and foreign
investors, foreign governments and international lenders to fill
the gap at a donor conference slated for the end of the year in
The International Monetary Fund is expected to attend the
conference and has discussed the possibility of extending a loan
to Egypt, one official said.
"The prescription which Lazard put forward is not very
different from the prescriptions of the IMF", said another
official, which would suggest a deal could be reached quickly.
The officials, who requested anonymity due to the
confidential nature of the plan, spoke to Aswat Masriya, a news
website run by the Reuters Foundation which promotes independent
journalism in Egypt.
Reuters reported last month that international investment
bank Lazard and U.S. consultancy Strategy& were
drawing up plans to reshape Egypt's economy that could be used
as the basis for reopening talks on a loan agreement with the
Such a deal could help kindle confidence among foreign
investors who have been unnerved by three years of turmoil and a
host of other problems including costly energy subsidies and a
lack of transparency in economic management.
The IMF was not available for comment. It has previously
said it was open and eager to restart loan negotiations which
ousted Islamist President Mohamed Mursi, who was unwilling to
impose unpopular reforms, had failed to conclude.
Just a month into office, President Abdel Fattah al-Sisi's
government has enacted a series of subsidy cuts and tax hikes
resembling IMF-type austerity measures which the officials said
were part of the consultants' plan.
The IMF has discussed the loan with officials from the
United Arab Emirates, a top Egyptian businessman familiar with
the situation said.
He said the UAE - the driving force behind the consulting
project - had also sought advice on the economic reform plan
from former PIMCO chief executive officer Mohamed El-Erian, who
have made recent trips to both countries. El-Erian declined to
Asked about al-Erian, a source in the UAE familiar with the
matter said: "He is one among many experts and organizations who
are advising on a number of ideas and best practices under
Prior to the 2011 revolt that ousted former president Hosni
Mubarak, direct investment in Egypt came to $8 billion a year.
In fiscal 2012-2013 the country drew in just $3 billion of
foreign investment. Egypt's GDP stood at $272 billion in 2013,
according to the World Bank.
The UAE wants to ensure aid and investments are spent
efficiently in a country where past leaders with military
backgrounds have often mismanaged the economy.
The UAE, Saudi Arabia and Kuwait have extended a lifeline
exceeding $12 billion in cash and petroleum products to help
Egypt stave off economic collapse since Mursi's ousting last
Saudi Arabia's King Abdullah called for "friends and
brothers" to attend a donor conference for Egypt following
Sisi's election in May.
The final date for the conference has not yet been set, but
Egypt's planning minister Ashraf al-Arabi said it "will
certainly be held in Egypt before the end of the year."
Egyptian officials said Saudi Arabia and the UAE had been
preparing for the conference since at least April.
They said Egypt expected its Gulf allies - who see the
country as the frontline in the battle against Mursi's outlawed
Muslim Brotherhood - to offer investments and petroleum products
rather than cash transfers.
Saudi Arabia and the UAE promised to give "aid to Egypt
without a ceiling", one of the officials said.
Cash transfers from the Gulf states have helped shore up
Egypt's foreign currency reserves in recent months, which
reached $16.687 billion in June.
But reserves are still nearly half the level seen before the
2011 uprising against Mubarak as political turmoil has hit
tourism and foreign investment.
The officials declined to comment on the investment
opportunities that Egypt was presenting to potential donors, but
they said consultants from Strategy&, formerly called Booz &
Company, had drawn up plans for restructuring the state-run
media and textile sectors.
Strategy&, owned by Price Waterhouse Coopers, and
Lazard declined to comment. Egypt's central bank, which manages
foreign reserves and participated in drafting the economic
reform plan, also declined to comment.
(Additional reporting by William Maclean in Dubai; Writing by
Stephen Kalin; Editing by Michael Georgy and Hugh Lawson)