Cabinet submits plan for unused assets to parliament

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Mon, 20 Aug 2018 - 03:11 GMT

BY

Mon, 20 Aug 2018 - 03:11 GMT

FILE - Egyptian Parliament

FILE - Egyptian Parliament

CAIRO - 20 August 2018: The Egyptian cabinet released on Monday a plan to establish the sovereign Egypt Fund, in line with legislation ratified by President Abdel Fatah al-Sisi earlier on the same day.

The plan submitted to the parliament was put in place through coordination with the Transition to the New Administrative Capital Committee and the Cairo Legacy Preservation Committee, in order to decide how buildings will be utilized after state bodies’ offices move to the new capital.

The process will start in 2019, and includes a move of all the 31 ministries and 57 sub-bodies. In line with government regulations, employees will gradually be transferred to the new capital in accordance to the needs of each department.

Under the legislation, certain unused assets will be invested in developmental, profit-generation projects where the state acts a shareholder. The fund will invest used and unused assets, shares in public companies, as well as their buildings and lands to partner up with the private sector and thereby increase capital, reduce unemployment, and modernize management strategies.

The investments would be directed to all sectors, particularly petrochemicals, mining, tourism and pharmaceuticals, achieving a balance between short and medium-term investments on the one hand, and long-term investments on the other hand.

Egypt Fund will have an authorized capital of LE200 billion ($11.2 billion) and will start with paid-in capital of LE5 billion; 20 percent of the latter will be injected by the government when it is set up.

Egypt selected 23 state companies for the first phase of the state IPO program, with a total share value of LE 80 billion, according to a statement from the Finance Ministry released in March.

Market value of the soon-to-be-listed companies stand at LE 430 billion, the statement noted, adding that the government intends to float between 15 percent and 30 percent of the companies on the Egyptian Exchange (EGX).

The program is expected to be implemented in a timeframe of between 24 and 30 months.

This comes as part of the state program to float some state-owned companies on the Egyptian Exchange under a five-year program announced in 2016 aiming to attract investments and revive the stock market.

It also aims to increase funding to Egyptian companies and maximize benefit from state assets.

The first phase of the program will include five companies in the petroleum sector, such as Enppi, Assiut Oil Refining Co (ASORC) and the Alexandria Mineral Oils Company (AMOC), six companies in the petrochemicals sector, the likes of Sidi Kerir Petrochemicals Co and the Egyptian Ethylene And Derivatives Company and three companies in the logistics sector.

As for financial services, the listing will include the Housing and Development Bank, Bank of Alexandria, Banque Du Caire, as well as Misr Insurance Company, according to the statement.

The real estate sector will list two companies, while the customer service and industry sectors will each have one company listed.

In November 2016, Egypt clinched a $12 billion loan from the International Monetary Fund (IMF). Egypt’s foreign reserves reached $44.03 billion in April 2018 for the first time in history, compared to $42.61 billion at the end of March, according to the Central Bank of Egypt (CBE). Foreign currencies’ balance in the country’s international reserves increased to $40.5 billion in April, up from $39 billion in March, increasing by LE 23 billion in one month, the CBE said. The reserves are expected to further grow over the coming two years to reach $50 billion.

Egypt’s growth has continued to accelerate during FY2017/18, rising to 5.2 percent in the first half of the year from 4.2 percent in FY2016/17. The current account deficit has also declined sharply, reflecting tourism recovery and strong growth in remittances, while improved investor confidence has continued to support portfolio inflows. In addition, gross international reserves rose to $44 billion by end-April, equivalent to 7 months of imports.

Additional reporting by Noha El Tawil.

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