Egypt cut its economic growth forecast for the current fiscal year after the downing of a Russian passenger jet last year battered tourism, Finance Minister Hany Kadry Dimian said Monday.

The revision to a range of 4 percent to 4.25 percent from a previous estimate of 5 percent underlines the challenges Egypt has faced trying to rally an economy that’s struggled since the 2011 uprising that toppled President Hosni Mubarak. Egypt has largely relied on Gulf Arab allies that have pumped in tens of billions of dollars in aid, grants and investments since the ouster of Islamist President Mohammed Mursi in July 2013.

Dimian, speaking to reporters in Abu Dhabi, said the relationship with Gulf Cooperation Council states has shifted from grants to investments. While they still give Egypt credit facilities for oil products, “what we are focusing on now is how to foster direct investments from the Gulf states,” especially since the rate of return on investment in Egypt is still relatively high, he said.

Budget Deficit

Gulf funds have been key to bridging a budget deficit that Dimian estimated at between 11 percent and 11.5 percent of GDP for the fiscal year ending June 30. That’s higher than the government’s original target, in part because of the “lower growth rate that we now anticipate,” he said.

The negative impact of the Metrojet passenger plane crash in October near the Red Sea resort of Sharm El-Sheikh has been amplified by a foreign currency crunch that has crippled some companies.

The crash “has had an impact on tourism,” Dimian said. “Tourism is one of the major sectors, not just as a driver of growth and one of the biggest sources of current-account receipts but because it has a higher multiplier impact on other” industries, he said.

Reform Measures

Officials have been working to offset the declines with measures designed to stimulate growth, raise revenue and address the foreign currency shortage. Dimian said authorities were pressing ahead with economic reforms.

Parliament is set to discuss value-added-taxation, while the the central bank has raised the cap on dollar deposits for some importers twice and has made more funds available to small- and medium-sized enterprises.

The central bank, however, has dismissed speculation that is plans to devalue the currency at present. The pound is trading at more than 9 pounds to the dollar on the black market versus the official rate of around 7.8 pounds. Many analysts and economists had said a devaluation was in the offing and probably necessary to draw new investment.

Dimian said the government hopes to tap the international bond market before the end of the fiscal year, market conditions permitting.

–With assistance from Tarek El-Tablawy.

This article was written by Alaa Shahine from Bloomberg and was legally licensed through the NewsCred publisher network.

Photo Credit: A tour bus passes near the historical site of the Giza Pyramids, near Cairo, Egypt. Lefteris Pitarakis / Associated Press