Econostrum | Economic News in the Mediterranean

Egypt plans to sell $24bn worth of public assets

Written by Frédéric Dubessy on Tuesday, May 17th 2022 à 15:45 | Read 187 times

Egypt plans to attract $10bn of private investment per year over four years and will therefore sell off stakes in state-owned companies and projects.

Egypt's prime minister announces the sale of public assets to private investors (photo: Egyptian government)
Egypt's prime minister announces the sale of public assets to private investors (photo: Egyptian government)
EGYPT. The Egyptian government presented on Sunday 15 May 2022 a plan including urgent measures to support the Egyptian private sector, improve the business climate and attract foreign direct investment.

Prime Minister Moustafa Madbouly wants private investment to reach 65% of the country's total within three years, compared to around 30% at present. He is therefore going to open up the capital of companies in various sectors currently held by the Egyptian state. "We will propose to the private sector projects in the field of electric vehicles, data centres, oil and gas networks and the expansion of gas liquefaction plants, communication towers and wind energy," explains Mousatafa Madbouly. This is the first step.

For the Prime Minister intends to go much further in the privatisation of the Egyptian economy by selling off his stakes in renewable energy projects and seawater desalination plants. It also mentions educational and banking assets.

State partnership programme with the private sector

The plan includes facilitated licensing and approval procedures for private investors' projects, which will be responded to within twenty working days. It also proposes "the computerisation of tax declaration procedures with the cancellation of 60% of the paperwork and its replacement by mechanised procedures for the registration of financial documents and tax inspection".

The new strategy is based on a partnership programme with the private sector worth $10bn (€9.60bn) per year over four years, including the promotion of sharing state assets with the private sector. A new investment map, the third version, will soon be published and will better identify the state's presence in different economic sectors. It will facilitate "the total or partial withdrawal of the state from a certain number of priority economic sectors, taking into account the contribution of these sectors to economic production, employment and the promotion of the attraction of foreign direct investment", says a government press release.

Fresh money is needed to address the problems of the country, which is seeing its revenues melt away, has a large budget deficit and is unable to stem the fall of its currency, which was recently devalued by 17%. The plan presented includes the objective of reducing the public debt over four years to 75% of GDP by the end of June 2026.

Twelve companies affected initially

Egypt is facing a drop in tourist numbers, a key sector bringing in foreign currency. It must also, because of the war in Ukraine, pay more for its wheat imports (128% increase in its price at world level) while its subsidy policy adds to the bill. As a producer, the country is also the world's leading importer of this cereal and its main supplier countries (85% of its supplies) are Ukraine and Russia. It also relies on them for 73% of its sunflower oil. One of the points of the plan is to "develop wheat cultivation to cover two-thirds of the local market needs and provide strategic goods at reduced prices by increasing the number of government outlets in rural and urban areas and by maintaining subsidies on bread despite the price increase".

A few years ago, the Egyptian government was considering the sale of minority shares in 23 state-owned companies by 2028. But nothing had yet been implemented to achieve this. This announcement on Sunday 15 May 2022 therefore relaunches this programme and, for the moment, relies on the sale of shares in twelve companies belonging to the public sector and the National Organisation of Service Products for a total value of $9.14 billion (€8.78 billion). "In addition, twenty-one resolutions will be issued, aimed at stimulating the stock market and increasing its competitiveness at regional and international level," the government said. The Prime Minister has already indicated that he is preparing to put an additional $15bn (€14.41bn) of assets on the market "quickly".

The services of Moustafa Madbouly will publish a list of sectors at the end of May 2022. The list will consist of three parts: those in which the state wants to partially withdraw, those in which it will sell minority stakes and those in which it will remain the majority shareholder. "The Egyptian state is committed to respecting the principles of competitive neutrality to ensure that public investments do not compete unfairly with the private sector," the government insists.

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