The Ismail cabinet raised the ceiling on the maximum value of USD bonds it can issue on international markets to USD 7 bn from USD 5 bn, according to a cabinet statement. The statement added that Finance Ministry was seeking to obtain additional financing in the face of a rise in interest rates on the domestic market and to increase FX reserves held by the CBE. “The government’s current trend is to replace domestic borrowing by external borrowing in order to reduce the cost of borrowing as local interest rates rise,” Reham El Desoki of Arqaam Capital told Reuters. The decision comes amid expectations of a bond issuance worth USD 3-4 bn at the end of this year, announced by Deputy Finance Minister Mohamed Maait last week. About USD 1 bn of that figure will be in the form of sukuks, Shariah-compliant bonds.

Cabinet also approved a framework for sukuks yesterday: A framework for the issuance of sukuks for companies and government bodies was adopted as part of amendments to the Capital Markets Act approved by the cabinet yesterday. The amendments also include enforcing stricter penalties and fines for violations of the law, giving authorities the power to reverse trades if international money laundering is suspected, and creating a registry of firms authorized to issue fair value reports. The amendments also cover trading of futures contracts and give EGX room to set lower listing fees to attract smaller issuers.

Cabinet will allow the private sector to bid for as many as 45 full-service “Takamol” hospitals to the private sector. The proposal won approval at yesterday’s cabinet meeting. The House Health Committee had rejected a similar proposal from the Health Ministry last July, which would have seen the private sector participate in the development and refurbishment of 377 hospitals providing low-income families with access to comprehensive healthcare. The government is now dressing the idea as turning public clinics into advanced healthcare centers in a bid to downplay the dreaded “privatization” word, according to ONA News Agency. Other decisions taken during yesterday’s meeting include:

• Approving the Finance Ministry acting as guarantor for the Egyptian Electricity Transmission Company’s annual payments for power plant projects;
• Approving amendments to a law governing the formation and structure of export councils which mandate that a third of their seats be filled by members of business associations;
• Signing off on a EUR 100 mn loan from the French Development Agency for the Alexandria tram project and other funding agreements with the agency for a primary healthcare support project;
• Approving a presidential decree to reorganize the General Organization for Teaching Hospitals and Institutes.