August 30, 2017 / 1:28 PM / in 4 months

UPDATE 1-Egypt's growth rises, foreign debt and investment surge

(Adds foreign debt, details)

CAIRO, Aug 30 (Reuters) - Foreign borrowing and direct investment helped drive Egypt’s economy up 4.9 percent year-on-year in the fourth quarter of its 2016-17 fiscal year, a Finance Ministry report showed on Wednesday.

It compared with a 2.3 percent year-on-year rise in gross domestic product in the fourth quarter a year ago. The fiscal year runs until the end of June.

Egypt last November signed a $12 billion three-year International Monetary Fund loan agreement tied to sweeping economic reforms such as tax hikes and subsidy cuts that the government hopes will lure back foreign investors who fled after the 2011 uprising.

Foreign direct investment in the 2016-17 fiscal year jumped 27.5 percent from a year earlier, the report showed.

Egypt’s foreign debt meanwhile rose 38.4 percent, to $73.9 billion at the end of March 2017, up from $53.4 billion in March 2016.

The cash-strapped country has been borrowing from abroad to fund its budget deficit and boost its balance of foreign reserves after a years-long dollar shortage sapped its ability to import and slowed economic activity.

The budget deficit during the first nine months of 2016-17 narrowed to 9.5 percent of GDP from 11.5 percent in the same period a year earlier, the report showed.

The government has so far received an initial $4 billion tranche of its IMF loan and sold $7 billion in five-, 10- and 30-year Eurobonds this year, returning to international markets for the first time since 2011.

This borrowing has helped push up Egypt’s foreign reserves, which hit a record $36.04 billion at the end of July 2017.

Reserves stood at just $19.041 billion in October, just before the central bank floated the pound currency and the government kicked off its IMF-backed reform programme. (Reporting by Ahmed Aboulenein and Eric Knecht)

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