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Selling state-owned companies will help stabilize the situation in Egypt
The food crisis, geopolitical tensions, and rising inflation around the world hit the Egyptian economy hard. To stabilize the situation and support the domestic market, the government took desperate measures. It developed a program, one of the points of which is the sale of state-owned companies. This process can be carried out in two ways: through a public offering of shares of institutions or package sales to investors, which are of strategic importance. And all the operations will be controlled by the sovereign fund. So far, the government has not published a list of public companies to be sold, but it is known that the authorities thus plan to attract 6 billion dollars.
Egypt intends to increase foreign direct investment, and for this various programs are being developed. In addition, the government is working with the IMF on a new loan. The critical shortage of funds in the country has arisen after the record rise in world market prices for food and fuel. In March this year, Egyptian authorities recorded an outflow of money amounting to 22 billion dollars. This amount was quite serious for the local economy, given that it has not yet fully recovered from the pandemic. Now the government of Egypt and the International Monetary Fund are looking for options to stabilize the situation. As recommended by the IMF, the country must undertake a number of comprehensive reforms aimed at improving economic processes.
Other countries also support Egypt. For example, the Abu Dhabi welfare fund and the Saudi Arabian state investment fund allocated $3 billion to strengthen the economy. They bought stakes in large companies from the state, all deals were made with the participation of the Egyptian sovereign fund.
The country is going through difficult times. Since the beginning of the geopolitical conflict in Europe, there have been problems with food, because imports have been limited for a long time. Now, energy problems have come to the fore. The government is trying to export as much energy as possible to make money for the budget. However, this decision is to the detriment of the country’s population, because there is a shortage of raw materials to meet the needs of the domestic market. As a result, there are regular power cuts in Egyptian cities. The situation is exacerbated by the fact that the local power transmission systems are unable to withstand the loads and breakdowns often occur. At the same time, utility tariffs have risen, as can be seen in other countries around the world with strong economies. For example, the Swiss authorities also warned the population about possible problems with the power supply, as the state imports a large share of energy in winter. In summer, the country supplies the market’s needs with domestic resources.