Accelerating Egypt’s privatisation programme of state-owned enterprises has been a key demand of the International Monetary Fund (IMF) since it signed the $3 billion Extended Fund Facility (EFF) with Egypt in December 2022.
In May, Prime Minister Mustafa Madbouli said that 21 deals had been concluded under the privatisation programme since 2022 generating $6 billion. However, the number of firms and the overall receipts fall shy of the government’s expectations, with geopolitical tensions as well as the global economic slowdown affecting the timing of planned offerings.
The most recent sale was that of United Bank, which had earlier failed to attract a strategic investor and was eventually sold through an initial public offering (IPO) on the Stock Exchange.
The value of the IMF’s original $3 billion EFF loan was also augmented to reach $8 billion in March 2024 due to the effects of geopolitical tensions on Suez Canal receipts and the economy at large.
The IMF also agreed earlier this year to provide Egypt with $1.3 billion as a Resilience Stability Facility (RSF) to address climate-related challenges and reinforce fiscal stability.
The fifth review of the loan, planned to take place last summer, was postponed until early October so that the fifth and sixth reviews are done together, releasing $2.5 billion.
In a press briefing last week, IMF Spokesperson Julie Kozack said that the first review of the RSF would take place with the sixth review of the EFF. She added that disbursements would only be available under the RSF when relevant reform measures are assessed to have been met.
She named accelerating the divestment of state-owned companies and phasing out fuel subsidies. The disbursement associated with each of these reform measures is about $137 million, she added.
Recent statements on privatisation say that the government is preparing 10 companies to be put on the block soon. They include bottled water company Safi, filling station operator Wataneya, military-owned food manufacturer Silo Foods, fuel retailer Chill Out, crude refiner Midor, wind farm Gabal Al-Zeit, plastics manufacturer Alamal Alsharif Plastics, and HoldiPharma subsidiaries CID Pharma and Misr Pharm.
According to media reports that have not been officially confirmed, the government is finalising a set of tax and regulatory reforms aimed at enhancing liquidity in the domestic stock market ahead of upcoming listings.
Among the proposed measures are complete tax exemptions on IPO revenues, expanded tax relief for investment funds, and more transparent stamp duty regulations for both resident and non-resident investors.
Economist Hani Genena, head of research at Pharos Al Ahly, foresees two possible types of incentives that could encourage prospective buyers in the industrial sector: cash-flow guarantees and export support, such as supply contracts with government agencies at fixed prices that ensure a buyer is guaranteed demand and revenue for the end product.
This arrangement is akin to what economists call an “off-take agreement”. A third option would be to allow the buyer to expand the operations of a given asset within a free zone, thereby gaining tax exemptions.
The privatisation programme would pick up pace if the region were more politically stable, Genena observed.
He noted that most Egyptian assets listed on the Stock Exchange are undervalued, citing the example of Orascom Construction, which was listed on the Abu Dhabi Stock Exchange at a valuation 50 per cent higher than on the Egyptian market.
In the view of an economist who asked to remain anonymous the most important guarantee the state can give investors is levelling the playing field in the economic activities they plan to invest in.
“This means the state must withdraw from sectors in which it competes with the private sector, implement the State Ownership Policy Document, and set a clear timetable for divestment,” he said.
While agreeing that the programme’s recent lack of progress is due to the impact of regional instability on the investment climate, he also attributed it to the heavy state presence in some of the sectors targeted for privatisation.
“Imagine what an investor might think when, for instance, acquiring Wataniya Petroleum, only for the government to later announce plans to establish new petroleum stations to compete with it,” he said.
Mohamed Hassan, managing director of Alpha for Financial Investment Management, attributes the slowdown in privatisation deals to inflated asset valuations.
The investment banks charged with carrying out the programme would have launched ambitious promotional tours, he said, but they had found no takers because the asking prices were too high.
In Hassan’s view, the best incentive the Ggovernment can offer to accelerate the programme would be to lower the prices of the scheduled assets below their current valuations.
He added that the government’s current access to dollar liquidity allows it to act with more freedom, reducing pressure to speed up IMF conditions, whether in privatisation or subsidy cuts. He does not expect the government to proceed with major offerings for the remainder of this year.
Regarding the IMF’s demand for fuel subsidy cuts, Genena believes that this will not be too difficult to implement as long as the oil cartel OPEC continues to increase production and global oil prices remain low.
He predicted another hike in domestic fuel prices of 10 to 15 per cent, which would offset a large portion of the state’s subsidy costs.
* A version of this article appears in print in the 18 September, 2025 edition of Al-Ahram Weekly
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