Amr El-Gohary, a member of the House of Representatives, considers the International Monetary Fund (IMF)’s call for economic authorities to limit borrowing from local and foreign banks with guarantees from the public treasury as a message to the government to speed up offering some assets owned by these authorities on the stock market or start the privatisation programme in the coming period.
In its second review of the Egyptian economic reform programme, the IMF called on economic authorities to limit their borrowing with guarantees from the state treasury.
El-Gohary pointed out that the government had announced three years ago its intention to offer some of its assets on the stock exchange, but the move was delayed for some reason. However, the IMF’s recent report means the need to speed up the government’s planned initial public offerings (IPOs) in the coming period.
Minister of Finance Amr El-Garhy said in an earlier press statement that the government was targeting to offer a set of its assets on the stock market within 18 months.
The Egyptian General Petroleum Corporation (EGPC) leads the list of borrowers with guarantees from the public treasury, accounting for 47.61% of loans, followed by the electricity sector with 24.95%, the Suez Canal Authority with 10.70%, other authorities with 11.16%, and the New and Renewable Energy Authority with 1.71%.
According to the current state budget for fiscal year 2017/2018, the Ministry of Finance targets collecting EGP 6bn from offering a number of its assets on the stock exchange.
El-Gohary noted that the government will not offer controlling shares of its assets so as to keep its majority control of shares, which means that local investors are the target in the proposed offerings.
He added that there are many public sector companies that can turn into a for-profit companies after privatisation of their administration without the state abandoning ownership.
On the other hand, MP Mohamed Badawi Desouky believes that offering state-owned companies on the stock exchange would raise their efficiency and enhance the competitiveness of the Egyptian economy in attracting foreign investments.
“The state’s role should be limited to control and legislation, and only operate in the sectors which private companies fail or avoid operating in,” he added. Desouky referred to the telecommunications sector, which was weak and inefficient at the end of the last century, but the entry of private companies into the sector made Egypt witness a boom in this field, attracting large investments and providing thousands of jobs.