This content was published on Jul 11, 2023 – 17:46
Carlos Kira Chivera and Shady Roshdi
New Administrative Capital (Egypt), July 11 (EFE).- The Egyptian government announced today a series of measures aimed at giving its limited private sector an economic “leadership” role, attracting investments in foreign currency. Egypt, and saving the economy from the triple whammy of debt, inflation and currency depreciation.
“We are focused on supporting the efforts of the private sector so that it can take leadership as soon as possible, as well as increasing foreign currency,” Egyptian Prime Minister Mustafa Madbouly told a press conference.
The politician made the announcement from the headquarters of the Council of Ministers in Egypt’s new administrative capital, where a new city the size of Singapore is being built 50 kilometers east of Cairo.
Precisely, this mega-project commissioned by the Egyptian President Abdel Fattah al-Sisi is one of the main reasons for the quadrupling of Egypt’s external debt since 2015, reaching 162,000 million dollars according to December 2022 data.
Sale of public companies
According to Madbuli, Egypt has signed contracts with the private sector to sell shares of state-owned enterprises worth $1.9 billion, of which $1.65 billion will be collected, the rest already deposited in Egyptian pounds.
The privatization is part of Egypt’s plan to meet International Monetary Fund (IMF) requirements to liberalize its economy, which is almost entirely state-dominated and whose enterprises are mostly owned by the military.
Last February, Egypt announced it would privatize shares of 32 public companies and sell them to “strategic investors,” who have already bought stakes in a total of five state-owned companies, according to Madbuli.
Among the companies privatized so far, a hotel operator stands out, 37% of which was sold to a consortium of Egyptian and foreign investors for $700 million, “to increase efficiency and increase tourist numbers”.
25-35% stakes in three chemical and laboratory companies have also been sold to Abu Dhabi Development Holding Company and the United Arab Emirates, while another 30% in another steel manufacturing company has been taken over privately.
In addition, Madbuli said the government was preparing to sell 50 additional companies “soon”, adding that there was a plan to privatize 21 water stations, which would provide the state with $3,000 million over the next five years.
The Minister of Development and Planning, Hala Said, told EFE that all of these sales would be in dollars, a currency that is in short supply in Egypt largely due to foreign debt payments, which pay for the bulk of food imports. There, its own currency, the Egyptian pound, is overvalued and few investors are willing to invest at the current exchange rate.
Incentives for investors
The prime minister promised that his government had made “revolutionary changes” for the private sector and to attract more investors, removing restrictions and many bureaucratic obstacles that had made it difficult to do business in Egypt.
In this sense, he has proposed a bill to repeal all rules that “give priority to government agencies” with the aim of “achieving competitive neutrality,” a move that was unthinkable when the military controlled it. Most of the big companies in the country.
Likewise, a “Free Zone System” will be implemented to establish companies, especially gas and energy-related companies, which will be exempted from life lease payments for land they acquire to build projects.
Plans to reshape the Egyptian economy
And to boost foreign currency, the government will present a plan aimed at increasing revenue from tourism and exports by 20% a year, as well as other efforts to boost revenue from the Suez Canal, said Madbuli, one of the key sources. Country currency, 10%.
“This will increase foreign currency (inflow) by 70,000 million a year,” the prime minister said, estimating that such income would mean around 191,000 million dollars by 2026.
Due to Egypt’s lack of liquidity, last December the IMF approved a loan of $3,000 million for the next 46 months, an immediate disbursement of $347 million already.
This is in addition to multi-million dollar loans the country has sought from the fund since 2016. EFE
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