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Sunday, 8 May 2022

More from El Sisi’s economy speech: Growing the EGX, support for local industry + cutting public debt

More on the Sisi administration’s plans to boost the economy: The state’s plan to attract USD 40 bn in fresh investment by opening the door to “private sector participation in state-owned assets” led coverage of President Abdel Fattah El Sisi’s televised speech at the “Egyptian family iftar” event (watch, runtime: 1:03:23) before the Eid break. El Sisi used the speech to announce several initiatives to help strengthen Egypt’s economy and industry, increase private sector investment, and reduce public debt.

Beyond plans to attract about USD 10 bn a year in fresh investment over the next four years, here’s what the administration is thinking:

#1- The state will provide fresh incentives to local manufacturers — including SMEs — to develop local industries and reduce imports, El Sisi said in his speech. The incentives include five-year tax breaks, usufruct contracts for land, and providing technical and material support for defaulters. El Sisi also said the state plans to “strengthen the role of the private sector” within local industries.

#2- The government will present a framework that will attempt to double the size of the EGX, the number of companies listed on it, and the number of local and foreign investors in the bourse, El Sisi said. The Madbouly government has previously signaled it will bring new assets to market, including fresh IPOs; sales of additional stakes in already-listed, state-controlled companies; and shares in military-owned companies, with the president using the speech to direct the Madbouly government to list military-owned firms on the EGX by the end of this year. (Smart money is on bottled-water maker Safi and filling station operator Wataniya, which are currently being prepared for public or private offerings before summer, according to Sovereign Fund of Egypt chief Ayman Soliman.)

#3- The government will announce a plan to reduce public debt and the state’s budget deficit over the next four years, the president said, without specifying when to expect the announcement. Egypt’s debt-to-GDP ratio is expected to come in at around 85% this year, and the government had been planning to bring down the debt-to-GDP ratio to below 90% in FY2022-2023 and 82.5% by June 2025. The government is also forecasting the deficit to narrow to 6.2% of GDP by the end of the current fiscal year from 7.4% last year, and 6.1% by the end of 2022-2023.

LOOK FOR MORE INFORMATION THIS WEEK: The Madbouly government is set to announce its strategy to privatize state-owned firms and boost private-sector participation in the economy when Prime Minister Moustafa Madbouly holds a presser. The measures to boost private investment are a key part of the government’s response to the global economic fallout from by Vladimir Putin’s war in Ukraine.

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