Egypt To Sell $1.9B in Assets in Privatization Push

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Facts

  • Egyptian PM Mostafa Madbouly announced on Tuesday that Egypt will sell off $1.9B worth of stakes in state-owned companies in a move that promises to bolster Egypt’s private sector and fix its ailing economy.1
  • Madbouly said that the government received $1.65B and the equivalent of $250M in Egyptian pounds in the sales, including an unspecified amount of shares in the country’s state-owned communications company, Telecom Egypt.2
  • The asset sale, sold to Egyptian investors and a UAE wealth fund, followed the government's previous aim for $2B in asset sales by the end of June. Tuesday's move also aims to emphasize Egypt's commitment to reforms under a $3B International Monetary Fund agreement seen as crucial to unlocking billions of investments, mostly from the Gulf states.3
  • Last year, Egypt announced a plan to attract $10B worth of investments over four years and push privatization to meet incoming foreign debt obligations. It's also reportedly planning to sell more stakes soon, including in a wind farm, military-owned Wataniya Petroleum, and a power plant built by Siemens.4
  • Egypt’s economy has seen rising inflation and the devaluation of its currency for over a year, with the government recently reporting a record high of 36.8% in annual inflation. Inflation has been partly due to supply chain disruptions following the start of the War in Ukraine.5
  • Egypt has increasingly looked to the Gulf states to prop up its economy, but they have expressed reluctance to further assist without domestic reforms. In January, Saudi Finance Minister Mohammed al-Jadaan said the kingdom would no longer provide aid "without strings attached."5

Sources: 1Reuters, 2Associated Press, 3FT, 4Al Jazeera, and 5AL.

Narratives

  • Narrative A, as provided by Daily News Egypt. Privatization will be one of the leading methods that Egypt will use to extricate itself from its current economic difficulties. The influx of much-needed capital following the sale of state-owned assets will bolster the economy and demonstrate to the international community that Egypt is more than willing to change how it has operated the economy and ensure domestic stability.
  • Narrative B, as provided by World Socialist Web Site. Besides the fact that Egypt is a repressive dictatorship under Abdel Fattah el-Sisi, it's poorly run, and its economic prospects are only going down. Inflation has been raging as food prices skyrocket. Sisi has been making desperate moves to fix the nightmare he has created, such as looking for foreign investment. However, the writing is on the wall: the future of Egypt under Sisi isn't bright, especially given the growing frustration of the Gulf states.