Egypt passes law to set up $11bn wealth fund amid privatisation push
Egypt also plans to raise up to 100bn pounds by selling minority stakes in at least 20 state-owned enterprises
Egypt will set up its first sovereign wealth fund with authorised capital of 200 billion Egyptian pounds ($11bn) amid plans to privatise state-owned companies.
The Egyptian parliament passed a law on Monday to establish the Egypt Fund to manage state assets, according to state agency MENA. The fund will start with paid-up capital of 5bn Egyptian pounds (Dh1bn) , with 1bn pounds to be transferred from the treasury.
The fund will focus on investments in sectors including petrochemicals, mining, tourism and pharmaceuticals, the statement said. It did not provide a timeline for when the fund would reach the planned 200bn pounds.
The new wealth fund is the latest in a series of government measures to revive investment and economic growth, which slowed down following the 2011 revolution that ousted President Hosni Mubarak. Floating the Egyptian pound and slashing energy subsidies are part of tough economic reforms tied to a three-year $12bn loan programme from the International Monetary Fund. The IMF has urged Egypt to reduce the role of the public sector in favour of private sector-led growth. Egypt plans to raise up to 100bn pounds by selling minority stakes in at least 20 state-owned enterprises on the bourse as part of a plan to boost state finances.
On Tuesday, Egypt named the first five public companies to offer their shares on the stock exchange in 2018. The firms are Alexandria Mineral Oils Company, Eastern Tobacco, Alexandria Container and Cargo Handling, Abou Kir Fertilizers, and Heliopolis Housing, according to an Egyptian cabinet statement.
"Our reading is that the setting up of the ‘Egypt Fund’ marks the first step towards divesting some of the state’s stakes in public-sector enterprises," Bilal Khan, a senior economist for the Middle East, North Africa and Pakistan at Standard Chartered, said. "However, it is still early days and much will depend on how quickly policy-makers can turn these plans into action."
The near-term growth outlook for the most populous Arab country is “favourable”, driven by a recovery in the tourism sector and rising natural gas production, the IMF said in a separate report earlier this month.
“The economic situation has continued to improve during 2018,” David Lipton, the IMF’s first deputy managing director and acting chair, said. “Strong programme implementation and generally positive performance has been instrumental in achieving macroeconomic stabilisation.”
Updated: July 18, 2018 05:54 PM