Egypt sets up fund to develop state-owned enterprises

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Egypt’s cabinet will set up a fund to finance the development of state-owned enterprises, it said in a statement, in a move that the IMF has been encouraging.

Egypt plans to sell shares in dozens of state-owned enterprises over the next few years to help boost public finances, as part of a broader slate of economic reforms tied to a $12 billion IMF loan Cairo received in late 2016.

But the privatisation programme was delayed last year due to global market volatility.

The new fund will “contribute to settling the public business sector’s debts to the banking system, provide the necessary financing for the administrative and technical reform of these companies and contribute to the removal of financial bottlenecks,” the cabinet said in a statement on Wednesday.

The IMF said a day earlier that Egypt’s reform programme, tied to its three-year loan, is aimed at easing “long-standing constraints to private sector development”. It includes improving the management of state-owned enterprises.

“Sustained implementation of these reforms is essential to reduce opportunities for rent seeking and to support strong and inclusive medium-term growth and job creation,” the IMF said in a statement.

The fund will be managed by a committee headed by the public enterprises minister and include members from the State Council, finance ministry, the National Investment Bank and the chairman of any holding company that the fund develops.

The state owns vast swathes of Egypt’s economy.

The government plans to sell stakes in three banks, a cigarette maker, an oil services company and a fertiliser maker among others.

It had planned to sell stakes in up to five companies from October to the end of 2018, plans which were scrapped after equities across emerging markets fell steeply last year. Another 18 were expected over the next two to three years.

Finance Minister Mohamed Maait said on Tuesday that the government will resume the privatisation programme “soon”, without elaborating.

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