The International Monetary Fund (IMF) has welcomed the Egyptian government’s announcement of signing $1.9bn deals to sell equity stakes in state-owned entities.
The Egyptian government announced on Sunday that it has raised $1.9bn from its Asset Monetization Programme. The sales included stakes in three state-owned companies and a partial exit from a steelmaker.
“Divestment is a critical component of the EFF-supported program,” said IMF spokesperson Julie Kozack. In a Sunday press brief. “It supports the gradual withdrawal of the state from economic activity and provides resources for external financing and debt reduction.”
The government offered 25-30% minority stakes in three government-owned companies: Egyptian Ethylene and Derivatives Company (ETHYDCO), Egyptian Drilling Company (EDC), and Egyptian Linear Alkyl Benzene Company (ELAB). The contract for these stakes was awarded to the Abu Dhabi Development Holding Company (ADQ) for $800 million.
In addition, Arab Company for Hotels and Tourism Investment (ICON), a subsidiary of TMG Holding, has allied with a foreign investor and participated in increasing the capital of the newly established Holding Company for Tourism and Hotels by 37% and a value of $700 million.
Finally, several public fund shareholders exited from Al Ezz Dekheila Steel Company by 31% and a value of $241 million, with 60% of the deal value paid in US dollars and 40% in Egyptian pounds.
The Asset Monetization Programme is part of the government’s State Ownership Policy (SOP), a new framework rolled out in December 2022 aiming to empower the country’s private sector across sectors to spur economic growth.
In June, Egypt appointed International Finance Corporation (IFC) as the strategic advisor for the government’s Asset Monetization Programme, which will focus on harnessing private capital and know-how to manage state-owned assets.
What does this mean for Egypt?
The sales of state-owned assets are a significant step for Egypt. They will help to reduce the government’s budget deficit and debt burden.
The sales are also seen as a vote of confidence in the Egyptian economy by foreign investors. This is important, as Egypt is trying to attract more foreign investment in order to boost growth.
What are the next steps?
The Egyptian government has said that it plans to continue selling state-owned assets in the coming months. It is also considering other reforms, such as privatizing some state-owned enterprises and liberalizing the labor market. Egypt’s Prime Minister Mostafa Madbouly said that the government aims to raise another $1bn in the near future.
The success of these reforms will depend on a number of factors, including the political will of the government and the support of the Egyptian people. However, if the reforms are successful, they could have a significant positive impact on the Egyptian economy.
