targeting Egyptian government Through the theses program, enhancing the role Private sector In various economic activities, and gradual exit from economic activity.
It also aims to offer shares in a group of… Companies State-owned banks may provide part of their financing needs and contribute to saving… Foreign exchange In the market, in light of the state suffering from a shortage of hard currency.
In February of last year, it was Egyptian Council of Ministers It has been announced that 32 state-owned companies will be offered over the course of a full year to strategic investors, or for public subscription Egyptian Stock ExchangeThis is before adding 3 new companies and assets, bringing the number to 35, within the framework of the state ownership policy document regarding its exit from… Economic activities Over a period of three years within the framework of encouraging the private sector.
The government aims to make state-owned assets worth $40 billion available for partnership Egyptian private sector Or foreign over a period of four years starting in 2022. It also aims to increase participation Private sector in Investments Implemented from 30 percent currently to 65 percent within three years. The government also aims to achieve $10 billion in annual revenue in four years.
The outcome of the government tender program since its launch until now, according to what was announced Egyptian government Last July, the total value of companies and assets offered since the announcement of the offering program until now amounted to $5.8 billion.
This is after the government completed the first and second phases of the announced proposal schedule with a 100 percent implementation rate, within the Egyptian government’s work program document in this context.
And it was Egyptian Minister of Finance The former, Mohamed Maait, had stated last February that the Egyptian government was targeting revenues of up to $6.5 billion from the government IPO program by the end of 2024.
And last August it was International Monetary Fund student Egyptian government By accelerating the pace of implementation of the state ownership policy document by accelerating the government proposals programme.
Private sector participation
For his part, the center director explained Egypt For Economic Studies, Dr. Mustafa Abu Zaid, in exclusive statements to the “Eqtisad Sky News Arabia” website, said that the proposal program announced by the Egyptian government is a program that primarily aims to increase the area of private sector participation in the economic development process by increasing private investments in the Egyptian economy.
He stated that the IPO program had been stopped due to the economic changes that affect investment opportunities in those companies offered in this program and which affect the evaluation of the companies. It is likely that the stopping period is due to the fact that the Egyptian government wants to obtain the best return for offering those companies, especially after stability. Exchange rate.
He expected that the return of the theses program would contribute to:
- Pumping more direct investments to support the Egyptian state’s plans regarding the overall indicators of the economy.
- Contributing to achieving the goals of the Egyptian government’s program regarding achieving a strong, competitive economy by increasing the gross domestic product and increasing dollar flows from private and foreign domestic investment and Egyptian exports.
- Enhancing investor confidence in the investment climate, especially with the recent tax and investment facilities package announced by the Egyptian government.
And according to Egyptian Ministry of Planning Recently, the GDP growth rate reached 2.4 percent in the fourth quarter of the 2023-2024 fiscal year, bringing the annual growth rate to 2.4 percent, down from 3.8 percent in the same period in the previous fiscal year.
According to the same ministry, the volume and percentage of private investment in Egypt increased to 499.2 billion pounds in the year 2022/2023, compared to 298.5 billion pounds, so that the percentage of private investment out of total investment became 36.4 percent instead of 25.5 percent.
According to the economic and social plan for the next fiscal year, the Egyptian government aims for the percentage of private investment to reach 50 percent of total investments for the year 2024/2025.
Gradual exit
Meanwhile, the economic expert, Ali Al-Idrissi, confirmed to the “Eqtisad Sky News Arabia” website that the government proposal program in Egypt is not privatization in its old sense, but the government seeks to have greater participation by the private sector, especially since the current economic situation requires this.
He pointed out that it is noticeable that the Egyptian government and its public sector were largely controlling and dominating economic activity during the last period, which harmed the country’s economic situation, pointing out that, for example, last year the Egyptian government’s participation rate out of the total total investments implemented reached about 79 percent. percent, while the private sector is 21 percent, which prompted the government to undertake a gradual exit process, aiming to reach 65 percent over three years.
He stressed that the proposal process would reduce the pressure on the state’s general budget, whose current situation requires the government to reconsider the projects it adopts so that they are projects with clear economic feasibility, especially in the short term.
He added that projects in the public sector also need to reconsider their management file. For example, many projects achieve large losses and, after being assigned to the private sector, achieve large profits, which reflects the presence of mismanagement.
He stressed that the economic return of the proposals program will not appear in light of the high levels of debt, and the expenses that are directed to servicing the debt more than education, health, and wages. Therefore, there is a need to reduce the percentage through proposals so that the expenses on projects that belong to the government and bear their wages and losses are transferred to the private sector.
And according to Central Bank of EgyptThe country’s external debt has fallen by more than $15 billion since the beginning of the year, as it continued to decline in the second quarter of 2024, for the second quarter in a row.
Egypt’s external debt at the end of the second quarter ending in June was about $152.9 billion, down from $160.6 billion at the end of the first quarter, after reaching its peak of $168 billion at the end of December 2023.
While according to data published on the website of the Egyptian Ministry of Planning, Egyptian domestic debt rose in the last quarter of 2023 by 4.6 percent, reaching 8.169 trillion pounds, compared to 7.808 trillion pounds during the third quarter of the same year.
Leave the field to the private sector
In addition, the director of the Vision Center for Studies, Bilal Shuaib, said in statements to the “Eqtisad Sky News Arabia” website that the conditions have become favorable for the Egyptian state to withdraw from some economic activities, leaving room for the private sector to constitute the largest percentage, and he explained that:
- The Egyptian government, in its state ownership policy document, pledges to make room for the private sector to constitute 65 percent of the market size.
- The Egyptian government aims to attract foreign investment from abroad.
- The exchange rate in the Egyptian state over the past two years was suffering from instability, but after the sixth of last March (the date of the currency float), the Egyptian market witnessed stability in the exchange rate after its liberalization, which created an opportunity for there to be an influx of foreign exchange reserves that reached approximately To 46.7 billion dollars.
In a related context, he reviewed some of the challenges and obstacles that the Egyptian government’s proposal program may face, including:
- High interest rate rates.
- Geopolitical tensions from Iranian-Israeli threats, and the threats of the Houthi group in the Bab al-Mandab Strait against American and Israeli interests, which has a major impact on the decline in revenues from the Suez Canal, so the Middle East region and the world are on a hot plate.
- High inflation indicators.
- High global debt rates.
- The state of economic recession that the world is facing. China, for example, which is the second largest economy in the world, is facing a slowdown in the rate of economic growth
- The instability of the exchange rate, as the foreign investor needs exchange rate stability, which is what the state is working on to give a message of reassurance to investors.
