Egypt eyes minority stake sales of state firms by December-end

Egypt's central bank said last week it had picked two banks to advise on the sale of its stake in United Bank. (File photo: Reuters)

Egypt plans to sell minority stakes in two companies by year-end, ramping up its long-delayed privatization program though analysts doubt it is moving quickly enough to convince investors it is serious about opening up the economy.

The state still controls vast swathes of Egypt’s economy, including three of its largest banks along with much of its oil industry and real estate sector.

The government plans to sell extra shares in two state firms already trading on the Egyptian bourse, Abu Qir Fertilizers and Chemicals Industries and Alexandria Container and Cargo Handling Co., while retaining overall control, sources familiar with the planned transactions told Reuters.

It has been talking for years about privatizing these and other companies, but has repeatedly postponed the sales.

The central bank also said last week it had selected two banks to advise on the sale of its 99.9 percent stake in United Bank, a deal it said several years ago would occur by end-2016.

Economists say if these and other sales do go through it would be a sign that Egypt, after enacting painful macroeconomic reforms backed by the International Monetary Fund (IMF), is serious about opening up the economy.

“The government has managed to restore macro stability, it has reined in the budget deficit, monetary policy has improved, the pound has been devalued and inflation is now coming under control,” said Jason Tuvey, senior emerging markets economist at Capital Economics.

But he said Egypt had so far shied away from privatizations and other structural reforms that could keep growth at the 6 percent economists say is needed to absorb hundreds of thousands of new workers entering the market each year.

“The fact that they're continuously being delayed suggests that there is significant resistance from within the regime towards the government ceding control,” Tuvey said.

Egypt hopes the sales will bring in revenue, encourage investment and help its bourse, whose market capitalization of $40 billion is less than a tenth of the Saudi bourse and smaller than even Casablanca’s in Morocco.

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Last Update: Wednesday, 20 May 2020 KSA 09:54 - GMT 06:54
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