Minister of Public Sector Affairs Ashraf El-Sharkawy and Central Bank of Egypt (CBE) Governor Tarek Amer are expected to meet soon to look into rescheduling debts worth EGP 40bn owed by companies in the public business sector, according to a source in the Ministry of Public Sector Affairs.
The company introduced the new ministry in the latest cabinet reshuffle on 23 March, separating it from the Ministry of Investment. The new ministry manages about eight state-owned holding companies, under which fall approximately 125 subsidiaries. They represent the government’s investment arms to meet citizens’ needs. These include consumer complexes, as well as iron and steel, and textile companies.
“El-Sharkawy is expected to ask Amer to launch an initiative that will halt the collection of loan instalments from the holding companies until they are restructured,” the source said, highlighting that during this period, interests will not be calculates on the premiums.
Preparations for the meeting are ongoing, the source added. It is expected to take place within days, in an effort to mitigate the effects of the accumulation of debt on companies and to use the revenues from these companies to allow the new minister to reform and restructure them.
Public sector companies have suffered from a severe shortage of liquidity, in addition to other losses over the past years, which has hindered their development and restructuring.
The minister is expected to invalidate the sale of numerous government companies to investors in the private sector as part of the privatisation programme that was undertaken under former president Hosni Mubarak’s government. The companies will be returned to the state, the source said, pointing to the examples of Tanta Flax & Oil Company and Al-Nasr Company for Steam Boilers.
The government is working to increase the capitals of some companies affiliated to the Ministry of Public Sector Affairs through launching initial public offerings (IPOs) on the Egyptian Exchange (EGX), amid efforts to provide liquidity to finance the expansions and restructuring of these companies.
Shortly after taking office, El-Sharkawy highlighted that restructuring companies and increasing their capital through the EGX does not entail selling or liquidating them.
The government’s programme focuses on reforming and developing the textile sector. It is conducting a feasibility study to supply the companies with production lines that meet the local market’s demands. The production lines are expected to provide job opportunities and mitigate pressure on the Egyptian pound in the process of importing yarn from abroad, according to the minister.
The minister demanded a record of the ages of all heads of the eight holding companies, especially as the majority of them are older than 70. This comes ahead of steps to replace the older leaders with younger ones. He further demanded monthly financial reports from the companies to assess their performance on a regular basis.
