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Thursday, 31 March 2022

Cabinet is working on a roadmap for reducing the state’s involvement in the economy

The government has an outline of its long-term strategy to encourage private sector involvement in the economy: The Madbouly Cabinet reviewed the broad strokes of its strategy to encourage private sector involvement in the economy at its weekly meeting yesterday, according to a statement. The framework will provide a roadmap for reducing the state’s economic activities, charting which industries it will withdraw from and when, as well as ring fencing strategic sectors where it wants to retain a presence.

There aren’t many details as yet, but here’s what we know so far: The government is working on putting together a “comprehensive view” of which sectors the state will be involved in for the next three years, the statement says, without providing further details. It will outline a “gradual exit” plan for the state from certain activities, which would be implemented in phases. Once the strategy is announced, the government will run an assessment of all state-held assets in the sectors it plans to exit and put in place a mechanism for these exits. The statement did not provide a timeline for when the strategy would be finalized.

Planning Minister Hala El Said had earlier likened the system to a traffic light: Green means “Go” for private investors, red would mean “hands off,” while amber would be “we can work together on this.”

Background: The Madbouly cabinet first announced the strategy late last year. The announcement came as the PPP Act cleared the House, with the act having been designed to make it easier for private companies to bid for public infrastructure projects in a range of industries. The law is expected to both help Egypt close its infrastructure funding gap while also helping to address concerns that the state’s growing involvement in the economy, especially through mega-projects, is crowding out parts of the private sector.

Also approved during yesterday’s meeting:

  • Extending the charter flight incentives program until 30 April, 2023. The cabinet last week extended it until 31 October, 2022. The program pays out between USD 1.5k and USD 3.5k per flight to charter airlines.
  • A draft presidential decree on the EUR 221 mn financing agreement signed with the European Investment Bank (EIB) to partially finance the modernization of the Tanta-Mansoura-Damietta railway.
  • A EUR 78 mn loan from the EIB to contribute to financing the Helwan Wastewater Treatment Plant.
  • The draft Senior Care Act, which would outlaw age discrimination against people aged 65 and above and legislate rights for senior citizens.
  • The Prime Minister’s draft decision to issue the executive regulations for the law establishing technological universities that was passed in 2019. The statement didn’t disclose when the exec regs would be out.

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