Egypt Suspends State-Company Stake Sales Due to Virus Turmoil

Egypt Suspends State-Company Stake Sales Due to Virus Turmoil

Egypt has put on hold its plans to offer stakes in state-run companies due to “unfavorable” market conditions created by the coronavirus pandemic, a minister said, dealing a setback to the country’s program to strengthen the economy.

In a phone interview Monday, Public Enterprise Minister Hisham Tawfik didn’t say when the program could be resumed. Investors are returning to the local debt market after have pulling out around $17 billion during the Covid-19 outbreak, but authorities have already sharply scaled back growth projections.

The government had sought to sell additional stakes in more than 20 companies to overhaul a bloated and loss-making public sector as part of its broader effort to revive the economy after years of stagnation. The companies ranged from banks to fertilizer makers.

Before the virus outbreak, Egypt’s was one of the fastest-growing economies in the Middle East, and the country was set to focus on private sector growth and development in the latest phase of its sweeping reform program. The overhaul began in late 2016 with a dramatic currency devaluation and subsidy cuts to secure a $12 billion International Monetary Fund loan.

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Many of the companies slated for stake sales are already listed on the Egyptian exchange, but others would be newly offered on the bourse.

So far, only one sale has taken place -- an additional 4.5% stake in Eastern Company S.A.E., the country’s tobacco monopoly. Plans for Heliopolis Housing fell through. The property developer was looking for suitable managers to take over the firm in exchange for a partial stake.

It has now appointed a new board and is redrafting its strategy. Tawfik said officials would now look at reviving the company before “thinking again” about offering it to investors.

©2020 Bloomberg L.P.