The Egyptian government has announced its intention to sell stakes in at least 32 companies by the end of March 2024, according to Prime Minister Mostafa Madbouly. The companies up for sale include Banque du Caire, United Bank of Egypt, Arab African International Bank, insurance, energy, and electricity companies, as well as government-owned hotels and agricultural firms. The first stakes will be offered by the end of March, followed by another sale at the end of June.
The move to privatize is part of the government’s efforts to revive its stalling privatisation plans and deal with its mounting economic difficulties. The country has been facing challenges due to the combined impacts of the Russia-Ukraine war and the Covid-19 pandemic on its import-dependent economy, which has led to a devaluation of its currency and spiraling inflation.
To help address these challenges, Egypt recently secured its fourth loan from the International Monetary Fund (IMF) in six years, a $3 billion bailout deal that requires the government to open up its books for state-owned enterprises, move forward with privatisation, and slow spending on public projects.
The military has historically played a significant role in the country’s economic life, and President Abdel Fattah el-Sisi, a former general, has doubled down on a military-controlled economic model to stem the financial turmoil following the 2011 Arab Spring. Despite this, there are concerns that the government’s haphazard sale of prized state assets to Gulf countries may raise questions among critics.
In light of these developments, a leading credit rating agency, Moody’s, recently downgraded Egypt’s rating, citing its dwindling foreign currency reserves and vulnerability to external shocks. Despite the downgrade, Moody’s raised its outlook on the country to stable from negative. The sale of state assets is intended to close the financing gap and attract much-needed international investment to Egypt.
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