Egypt Sells $1.9Bn in State Assets

Policy Brief Program

July 2023

Egypt’s State Assets Sales:

• On July 11, Egypt signed deals to sell $1.9 billion in stakes in state assets. 
  • Buyers included the Abu Dhabi sovereign wealth fund and the hospitality arm of Egyptian real estate group Talaat Mostafa, among others.
  • Approximately $1.65 billion of the total $1.9 billion will be paid in foreign currency.
• The deals that Egypt has planned and executed are wide-ranging. They touch state-owned companies in sectors such as wind energy, petrochemicals, steel, and hotels. 
  • Egypt agreed to sell a minority 31% stake in Ezz Dekheila, the country’s largest steel company. 
  • Egypt also signed over an undisclosed number of shares in its massive telecommunications company, Telecom Egypt.
  • Abu Dhabi’s sovereign wealth fund ADQ bought 800 million in Egyptian Ethylene and Derivatives Co., oil firm Egyptian Drilling Co. and Egyptian Linear Alkyl Benzene.
  • Egypt had intended to hit $2 billion in share sales by the end of June but did not reach that goal.

Motivating Factors:

• Egypt plans to ultimately sell stakes in a total of 32 companies. Announced in January 2023, this effort is a fundamental condition of the $3 billion bailout agreement that the International Monetary Fund (IMF) granted Egypt in December 2022. 
  • A 46-month deal, the IMF stated that the deal was meant to make way “for inclusive and private-sector-led growth.” It also aims to reduce public debt and enhance macroeconomic stability.
• Egyptian Minister of Planning and Economic Development Dr. Hala el-Said stated that these deals are meant to “promote the participation” of the private sector in the economy and tempt investors to Egypt with greater opportunity in successful state companies. 
• Analysts mentioned that these deals are likely targeted at bolstering the Egyptian pound and increasing hard currency reserves, which have been scarce amid global macroeconomic instability and surging import prices. 
• The Egyptian pound has lost approximately half of its value in comparison to the dollar in the past year and a half.

Background on the Egyptian Economy:

• Egypt is the world’s top importer of wheat. Given that Ukraine is a top exporter of the grain, Egypt has been struggling with inflation in the wake of Russia’s invasion. Wheat prices have surged, and Egypt’s supply chain is disrupted by the conflict. 
  • Inflation reached a record high of 35.7% in June. Everyday essentials, such as food, clothing, and medical expenses have surged, becoming unaffordable for many Egyptians. 
  • Foreign investors have pulled over $20 billion out of Egyptian markets since Russia’s invasion of Ukraine.
• Before the war, Egypt’s government was taking painful steps to boost its economy, such as cutting subsidized fuel, water, and electricity and raising interest rates. Combined with the war, these moves have put over 30% of Egyptians in poverty. Egypt’s population and its need for government support is only growing. 
  • The crisis has forced the government to reverse course, increasing funding for its food subsidy program by over $1 billion from 2022 to 2023. 
• Egypt also faces a debt crisis. It owes over $52 billion to international institutions – 44.7% of which it owes the IMF alone – a figure over triple what Egypt owed in 2013. 
  • Analysts state that Egypt’s economic woes lie in its inability to properly appropriate money or to relax the tight control the state has maintained over industry, driving away private investment. 
  • Given recent efforts to liberalize its economy by selling stakes in private companies, analysts suspect that Egypt has reached a point so economically difficult that it has decided to turn a new page in its economic strategy.