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Sunday, 7 August 2016

Cabinet approves plans to borrow USD 3-5 bn, “good” progress with IMF negotiations

We are borrowing USD 3-5 bn through a eurobond issue: Cabinet has approved plans for an international bond issuance of between USD 3-5 bn, Reuters reported on Thursday. A Finance Ministry official said Egypt would target USD 3 bn initially but could increase the borrowing to USD 5 bn if “it found there was investor appetite.” A day earlier, Egypt’s government published an advertisement in the FT seeking lead managers for the issue. Deputy Finance Minister Ahmed Kouchouk said the government will begin accepting bids to manage the issuance starting from this week, Al Masry Al Youm reported.

Clauses relating to the state budget are now on the agenda in talks with the International Monetary Fund, Finance Minister Amr El Garhy told Reuters, and the government is making “good” progress in the negotiations. “We want to achieve the figures we set for the budget… This is what we are discussing with the IMF,” El Garhy said.

El Garhy denied on Thursday the IMF has asked for a three-step plan to float the EGP, according to Al Masry Al Youm. On Wednesday Al-Shorouk had reported the IMF was pushing for a three-stage float. Al Borsa also has news of the denial.

VAT by September: The minister expects the House of Representatives to pass the value-added tax by the end of August or early September, but said he cannot disclose the details of ongoing discussions between the government and parliament. A member of parliament told Al Borsa the IMF delegation is expected to meet up with political parties represented in the House of Representatives this week to discuss the loan.

The government is looking to generate EGP 6-8 bn annually from the planned IPOs of state-owned companies. El Garhy said the state will list only 20-30% stakes in the companies it is looking to float. He did not give specify timelines for the listings.

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