Egypt to sells state-owned enterprises to fill state coffers
War in Ukraine and economic crisis have shrunk the state budget by billions. To cope with the situation, the government plans to list a number of state-owned and military-owned companies on the Egyptian Exchange by the end of the year. More will be sold in the future. The Egyptian pound was devalued by 17% while the debt-to-GDP ratio reached 85 per cent. Meanwhile, the cost of imported raw materials is rising.
Cairo (AsiaNews) – In an attempt to attract foreign investors and limit the effects of the country’s economic crisis, the Egyptian government plans to list on the local stock exchange at least ten of its most important state-owned and military-owned companies by the end of the year. More will be sold int the coming years.
“The [Ukraine] war repercussions have put a heavy burden on us financially,” said Prime Minister Mostafa Madbouly, cited by al-Monitor. “We expect 130 billion pounds (US$ 7.1 billion) of immediate impacts, as well as 335 billion pounds (US$ 18.3 billion) of indirect effects as a result of increased prices for commodities like wheat, oil and even interest rates," he added.
Madbouly noted that one of the war’s direct consequences was the outflow of billions from Egypt. This has forced the government to devalue the national currency by 17 per cent, but Gulf states have come to the rescue with pledges worth US$ 22 billion.
Despite the aid, Egypt is still facing a budget deficit of almost US$ 20 billion, with a debt-to-GDP ratio of 85 per cent and substantial increases in the prices of imported raw materials.
Due to the war in Ukraine and the food crisis connected to it, not to mention market speculations that spiked prices, the government will spend US$ 4.4 billion on wheat this year, up sharply from US$ 2.5 billion last year.
Furthermore, according to Madbouly, higher oil prices will cost the state US$ 11.2 billion instead of .7 billion to buy 100 million barrels.
To raise capital in the coming months, the government plans to sell some state-owned assets to private investors and list government-owned companies on the exchange, while a number of other important companies will be sold later.
Prime Minister Madbouly also announced the merger of seven Egyptian ports into a single company as well as several luxury hotels, with a portion of each listed on the Egyptian Exchange for local and foreign investors
Last but not least, private investors will be allowed in transportation, including monorail, high-speed train and electric train, as well as iron, cement, aluminium, tobacco and sewage treatment plants.
Altogether, the government to reduce its investments and properties in 79 industries, such as fish farming, livestock, dairy, construction, TV and film production, retail trade, automobiles, furniture and fertilisers.
Many experts expect the Gulf states to acquire many of these companies.
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