According to Planning Minister Hala Elsaid, ADQ, one of Abu Dhabi’s three main state wealth funds, has bought $800 million of minority stakes in three companies. Image Credit: AP

Cairo: Egypt said it had agreed to sell $1.9 billion of state assets to local firms and a UAE wealth fund.

The divestments mark the most significant step forward on a broad plan announced in February to raise billions of dollars by listing whole or parts of companies, or offering them to strategic investors. The program is a key part of President Abdel-Fattah El-Sisi’s attempt to replenish the state’s coffers and convince investors to come back, as well as fulfill terms of a $3 billion International Monetary Fund loan deal.

“This is just a start,” Aathira Prasad, the Dubai-based director of macroeconomics at advisory firm Nasser Saidi & Assoc., said. “It’s still too little in terms of what was promised, but at least it’s a step in the right direction.”

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According to Planning Minister Hala Elsaid, ADQ, one of Abu Dhabi’s three main state wealth funds, has bought $800 million of minority stakes in three companies. They are Egyptian Ethylene and Derivatives Co., oil firm Egyptian Drilling Co. and Egyptian Linear Alkyl Benzene, a petrochemicals producer.

ADQ didn’t immediately respond to a request for comment.

In addition, local real estate developer Talaat Moustafa invested $700 million in a holding company that grouped seven prominent state-run hotels, including the Old Cataract in Aswan and the Winter Palace in Luxor. The state also sold 31 per cent of Ezz Aldekhela Steel for over $230 million, in a move that will see the company de-listed from the Egyptian stock exchange.

Of the $1.9 billion of deals, $1.65 billion are to be in foreign currency and the rest in Egyptian pounds, Prime Minister Mostafa Madbouly said at a press conference in Cairo on Monday. Another $1 billion in deals will be announced later, he said. Elsaid, the planning minister, said other deals in the works included the sale of Gabal El-Zeit wind farm and a Siemens-built power plant. Those deals could be finalized in October and early 2024, respectively.

The measures, including amendments of investment laws and other steps to boost private sector growth, are evidence of Egypt’s commitment to building its future, Madbouly said.

He added that authorities are working on boosting revenue to $191 billion by 2026 by increasing exports, tourism, worker remittances and other key sources of foreign currency.

Yuan bonds

Part of that could come from the issuance of new yuan bonds, the plan for which Finance Minister Mohamed Maait said was proceeding. In addition, the government is working on selling yen bonds worth around $250 million, he said. Maait said the government was aiming to cut the ratio of debt to gross domestic product to between 75 per cent-80 per cent in five years and was continuing efforts to boost tax revenues.

The announcements were clearly aimed at allaying concerns about whether the government would truly move ahead with its broader program to revive the economy.

Gulf nations have pledged billions of dollars in assistance, mainly through investments. But that money has been slow to materialize.

Cairo’s traditional backers are wary of pumping in cash ahead of what they expect will be another devaluation. The government has said it’s committed to a promise of a more flexible exchange rate, and many analysts expect the next devaluation to be held off until it builds more foreign-exchange buffers.