Latest news with #StateOwnershipPolicy
Mada
5 hours ago
- Business
- Mada
New law to regulate state ownership: Pushing through the IMF review with the same old recipe
During the International Monetary Fund delegation's visit to Cairo for its ongoing fifth review of Egypt's US$8 billion loan program, the government renewed its push for a draft law that would regulate state ownership in companies in which it holds full or partial stakes. While the IMF closed out its visit with praise for Egypt's economic performance, it once again called for a faster pace of reform to reduce the state's footprint in the economy, particularly by moving forward with asset sales in sectors the government had already committed to exit under its State Ownership Policy. The draft legislation, now with the House of Representatives a year after the Cabinet approved it, is closely tied to the implementation of that policy and the broader privatization agenda. Mada Masr broke down what's in the law and spoke to sources familiar with the key issues it introduces, who painted the new law as little more than 'reheating leftovers' — a recycled, hasty push aimed to appease the IMF ahead of its report. *** First, what's in the law? According to a copy of the draft law reviewed by Mada Masr, the legislation would establish a central unit within the Cabinet responsible for inventorying and tracking state-owned companies. This body would submit recommendations to the Cabinet and its ministerial economic group, with a mandate to 'implement the state-ownership policy according to specific timelines and targets, and remove obstacles to progress in this area.' First issued in 2022, the State Ownership Policy outlines the government's roadmap for withdrawing from sectors outside its designated 'core functions,' including those that the private sector has shown reluctance to invest in. The stated objective is to generate financial savings that could ease pressure on the state budget. The policy sets three directions to manage state involvement: full exit within three years, continued participation with either stable or reduced ownership; or continued participation with stable or increased investment. Under the proposed law, the new Cabinet unit would also develop frameworks to 'regulate' all state-owned assets. For companies entirely owned by the state, Article 6 outlines mechanisms that include selling shares — whether through initial or secondary market offerings — increasing capital, expanding the ownership base, or restructuring through mergers or demergers. In cases where the state holds only a partial stake, its role would be limited to managing the sale of shares or voting rights. The draft law also requires relevant authorities in share-owning state entities to provide the newly proposed Cabinet unit with any information or data it requests. This includes updates on restructuring plans and policies, as well as detailed reports on projected and actual cash flows and overall financial performance. Article 5 of the draft outlines steps the unit may take to implement its regulatory programs for both fully and partially state-owned enterprises, with frequent references to privatization and private sector involvement. These include recommending the best approach to attract private investment across various sectors, maintaining and regularly updating a comprehensive database of companies fully or partially owned by the state, evaluating whether continued state ownership is warranted, and determining the most appropriate exit strategy for each company based on the economic or investment sector under which it falls. The unit would also be authorized to identify state-held shares in companies and decide whether to sell them — either in full or in part — or list them on the stock exchange. It would be responsible for determining the size of the stake to be offered and approving the selection of investment banks, offering advisors, and financial consultants, in coordination with the relevant owning state entity. The draft law also stipulates that, upon a proposal from the unit's executive director and with Cabinet approval, a formal decision must be issued to set mechanisms for managing labor surpluses in state-owned companies. It states that any financial costs associated with these measures must not add further strain on the public budget. As part of implementing the State Ownership Policy, the law introduces restrictions on the state's ability to expand its holdings. It requires prior written approval from the unit before any state entity can establish or invest in a company whose primary activity falls within sectors where the state has opted to keep its investments unchanged. It also prohibits investment in sectors from which the state has committed to a full or partial withdrawal, as outlined in the policy document. *** Not everyone, however, believes the legislation has much chance of success or has been fully thought out. A member of the Cabinet's macroeconomic advisory committee criticized its timing as rushed, 'like reheating leftovers that have been there for a year.' Speaking to Mada Masr, the source said the law appears to offer a superficial display of reform to satisfy the IMF and secure a favorable outcome in the fifth review negotiations. The Cabinet approved the draft law in May 2024, and the parliamentary economic committee began deliberations in a closed session on May 25, without journalists present. The committee approved the draft and referred it to the House's general assembly for a final vote. The IMF previously referenced the draft law as part of Egypt's structural reform commitments. In its third review report, published in August, the fund said the law aims to 'embed key elements of the state-ownership policy into law.' The fourth review report has yet to be published, at the request of the Egyptian government for it to be withheld. The advisory committee source argued that the law's passage was merely 'a formal gesture to show that certain steps — with no value to the project's core — are being taken.' They also pointed to overlap between the proposed unit's role and existing bodies that already, in a way, manage state-owned assets: the Sovereign Fund of Egypt, the Public Enterprise Ministry, and the National Investment Bank. By contrast, Nation's Future Party MP Mahmoud al-Saeedy, a member of the House Economic Committee who took part in the discussions, told Mada Masr he sees no conflict between the new unit and the sovereign fund. 'As part of its multiple roles,' he said, 'the unit may recommend transferring a specific asset to the sovereign fund after reviewing its data.' A second member of the Cabinet's macroeconomic advisory committee raised concerns about the 'ambiguity surrounding the new unit's role and its actual purpose.' They noted that a committee with nearly identical responsibilities — the higher committee on implementing the State Ownership Policy — was already created by administrative decree in December 2022 and also reports directly to the Cabinet. Amr Adly, an assistant professor of political economy at the American University in Cairo, told Mada Masr that such overlap and conflict between the roles of the sovereign fund and the new unit is not unusual. Egypt's bureaucratic system, he noted, has long been characterized by parallel bodies with overlapping mandates. 'Take, for example, the National Center for Planning State Land Use,' he said, 'whose responsibilities both resemble and clash with those of the Industrial Development Authority, the Tourism Development Authority and the New Urban Communities Authority.' Beyond questions of overlapping mandates, the draft law also includes a broad exemption from its own provisions. According to the text, the law does not apply to companies engaged in activities deemed to be of 'national or strategic importance, as defined by a Cabinet decision issued based on a joint proposal from the relevant minister and the competent authority within the owning state entity.' But the draft provides no definition or clear criteria for what qualifies as a national or strategic activity. This vague exemption strips the law of its substance, according to both advisory committee members. The first of the sources said that it further demonstrates that 'the government has no real intention of implementing the law, and only aims to show the IMF that it is fulfilling the required tasks.' Adly echoed the same skepticism, suggesting that the broad exemptions indicate the law is not grounded in any genuine governmental belief in the need to exit the economic sphere or scale back its role in line with the IMF's repeated calls. Instead, he argued, the government is primarily seeking short-term financial returns from select assets to compensate for its inability to grow tax revenues — while maintaining control over assets it is unwilling to relinquish. In contrast, the law's explanatory memorandum defends the exemption, claiming that decisions related to such companies may involve matters of national security or require approval at higher levels of decision-making. The exemptions outlined in the draft law also include 'companies established under international agreements, companies named in special legislation that governs their purpose or ownership structure, and contributions by state-owned insurance firms to the capital of other companies.' Under the law, the new asset inventory and tracking unit is to be led by a full-time executive director with proven expertise in investment, corporate management, and economic project administration. The unit will be supported by a team of experts and specialists in these fields, alongside personnel with financial, technical, and legal qualifications. Staff may be hired on a contractual basis or seconded from existing administrative bodies. The unit's organizational structure will be determined by a decision from the prime minister, based on a proposal by the executive director and after consultation with the Central Agency for Organization and Administration — 'without being bound by the current government rules and regulations.' Saeedy interpreted this provision as intended to bypass several standard government constraints that may not be compatible with attracting top talent to the unit — 'particularly the public sector's maximum wage cap,' he noted. The government's decision to revive this law came as Egypt undergoes its fifth review under the IMF loan agreement, which shows how closely the State Ownership Policy is tied to the terms of the country's arrangement with the fund. The State Ownership Policy document was issued following the government's November 2021 announcement of the findings of a study — prepared, it said, by the Cabinet Information and Decision Support Center — the full text of which was never published. The study was intended to lay out steps to reinforce the state's shift toward supporting the private sector. According to the government at the time, the document emphasized the need to 'identify key sectors in which the state will remain, those it will exit, and others it will gradually withdraw from.' It also recommended 'reforming the public sector by retaining major companies in strategic, high-priority sectors' while divesting from those deemed less critical. The study's conclusions closely mirrored the IMF's second review report, released four months earlier. That report explicitly called for 'a clear state ownership policy,' stating that 'reform of state-owned enterprises should start with developing an ownership policy to enhance accountability and transparency, define the sectors where public intervention is governed by a public service mandate, and implement performance boosting measures. This would enable the state to withdraw from other sectors and allow for private sector-led productivity gains.'
See - Sada Elbalad
3 days ago
- Business
- See - Sada Elbalad
Labor Minister meets Egyptian Workers in Serbia
Taarek Refaat Minister of Labor Mohamed Gebran concluded his visit to Serbia on Saturday with a visit to Agrovida, one of the largest labor recruitment companies in Serbia. The minister was received by the company's director, Felicia Stamatovic. Minister Gebran also visited Egyptian workers at their work sites. Gebran assured the workers that they are envoys to their countries abroad, and that communication channels are open with them at all times. He explained that he was keen to meet with them and check on their well-being as part of his ongoing monitoring of the conditions of Egyptian workers abroad. Minister of Labor: Plan for electronic linkage between Egypt and Serbia to facilitate labor mobility. Minister of Labor: Plan for electronic linkage between Egypt and Serbia to facilitate labor mobility. In a meeting with the company director to open new markets in the fields of construction, building, and agriculture, the Minister affirmed the Ministry's readiness to provide the skilled and trained Egyptian cadres the company needs in the future. He reviewed the efforts and plans for training and professional testing, as well as the skills possessed by Egyptian workers. For his part, the company director praised the skill level of Egyptian workers, appreciating the Minister's visit, which carried many messages to motivate workers to work and produce. He also emphasized the importance of the discussions with the Minister, which resulted in the development of a plan to recruit new Egyptian workers. During the coming period. Minister Gebran began his visit to Serbia yesterday, Friday, in the presence of Ambassador Basil Salah, Egypt's Ambassador to Belgrade, and Ibrahim Hamza El Sheikh, Deputy Ambassador. During the visit, he held meetings with the Minister of Labor, the Minister of Interior, the President of the Serbian Chamber of Commerce and Industry, and the Director of the Serbian National Employment Agency. The aim was to activate cooperation and open the Serbian labor market to trained Egyptian workers. This is in line with the agreements and memoranda of cooperation signed last July by President Abdel Fattah El Sisi and Serbian President Aleksandar Vučić, particularly in the field of labor and employment. read more CBE: Deposits in Local Currency Hit EGP 5.25 Trillion Morocco Plans to Spend $1 Billion to Mitigate Drought Effect Gov't Approves Final Version of State Ownership Policy Document Egypt's Economy Expected to Grow 5% by the end of 2022/23- Minister Qatar Agrees to Supply Germany with LNG for 15 Years Business Oil Prices Descend amid Anticipation of Additional US Strategic Petroleum Reserves Business Suez Canal Records $704 Million, Historically Highest Monthly Revenue Business Egypt's Stock Exchange Earns EGP 4.9 Billion on Tuesday Business Wheat delivery season commences on April 15 News Ayat Khaddoura's Final Video Captures Bombardment of Beit Lahia News Australia Fines Telegram $600,000 Over Terrorism, Child Abuse Content Sports Former Al Zamalek Player Ibrahim Shika Passes away after Long Battle with Cancer Sports Neymar Announced for Brazil's Preliminary List for 2026 FIFA World Cup Qualifiers News Prime Minister Moustafa Madbouly Inaugurates Two Indian Companies Arts & Culture New Archaeological Discovery from 26th Dynasty Uncovered in Karnak Temple Business Fear & Greed Index Plummets to Lowest Level Ever Recorded amid Global Trade War Arts & Culture Zahi Hawass: Claims of Columns Beneath the Pyramid of Khafre Are Lies News Flights suspended at Port Sudan Airport after Drone Attacks News Shell Unveils Cost-Cutting, LNG Growth Plan
Egypt Today
7 days ago
- Business
- Egypt Today
Significant progress in stabilizing economy under EFF program says IMF in post-review statement
Cairo – May 28, 2025: A recent statement from the International Monetary Fund (IMF) indicates significant progress in Egypt's efforts to stabilize its economy under the Extended Fund Facility (EFF) program, following a thorough review mission earlier this month. From May 6 to May 18, an IMF delegation led by Vladkova Hollar met with Egyptian officials in Cairo to discuss economic policies and evaluate advancements in implementing the EFF program's commitments. The team also examined economic prospects for the forthcoming fiscal year. The IMF raised Egypt's economic growth projection for FY2024/2025 to 3.8 percent, driven by a stronger-than-anticipated performance during the first half of the fiscal period, according to the fund. Private investment has also surged, rising from 38.5 percent of total investment in the first half of FY2023/2024 to nearly 60 percent in the same period of FY2024/2025. While inflation edged up slightly to 13.9 percent in April, it remains on a downward trend. Despite positive developments, the current account deficit remains broad, impacted by rising imports, decreased hydrocarbon output, and disruptions to the Suez Canal, which offset gains from tourism, remittances, and non-oil exports. The IMF noted that fiscal prudence is being maintained, with public investment spending kept within the budget ceiling for July to December 2024, aided by improved oversight of large public infrastructure projects. The mission welcomed Egypt's ongoing efforts to modernize tax and customs procedures, which are beginning to improve efficiency and build confidence among economic actors. The IMF stressed the importance of continuing to widen the tax base and streamline exemptions to enhance domestic revenue mobilization, critical for financing development and social programs. Furthermore, Egypt is developing a medium-term debt management strategy aimed at increasing transparency and gradually lowering the high costs of debt servicing within the budget. Looking forward, the IMF underscored the urgency of deeper reforms to unlock Egypt's growth potential, create quality jobs, and boost economic resilience. Key priorities include reducing the state's footprint in the economy through implementation of the State Ownership Policy and asset divestment initiatives, while also improving the business climate to foster private sector-led growth. Hollar expressed gratitude for the hospitality extended during the mission and indicated that discussions will continue virtually to finalize the remaining policy measures necessary for completing the fifth review under the EFF program.
Al-Ahram Weekly
7 days ago
- Business
- Al-Ahram Weekly
IMF concludes 5th review mission visit for Egypt's EFF loan programme - Economy
The International Monetary Fund (IMF) announced Wednesday that it had concluded its visit to Egypt to discuss the fifth review of the country's $8 billion Extended Fund Facility (EFF) loan programme. An IMF staff team led by Ivanna Vladkova Hollar visited Cairo from 6 to 18 May. It held productive talks with Egyptian authorities on the economic and financial policies needed to complete the review. 'These constructive discussions advanced both technical work and policy dialogue as part of the fifth EFF review,' Hollar stated, "Egypt has made substantial progress toward macroeconomic stability. Based on stronger-than-expected performance in the first half of the year, we have revised our FY2024/2025 growth forecast upward to 3.8 percent." She added that private investment rose significantly, from 38.5 percent of total investment in H1 FY2023/2024 to nearly 60 percent in FY2024/2025. While inflation increased to 13.9 percent in April, it remains on a downward trend. 'The current account remains wide, as rising imports, lower hydrocarbon output, and Suez Canal disruptions have offset gains from tourism, remittances, and non-oil exports,'Hollar said. 'However, fiscal discipline—especially improved oversight of large public infrastructure projects—is helping contain demand pressures. Public investment spending remains below the ceiling set for July–December 2024.' She welcomed recent efforts to modernize and streamline tax and customs procedures, which are already delivering positive results. Continued domestic revenue mobilization is essential to support priority development and social spending by broadening the tax base and rationalizing exemptions, she added. Hollar also highlighted Egypt's progress on a medium-term debt management strategy to improve transparency and gradually lower high debt service costs. She emphasized the need for deeper reforms to unlock growth, create quality jobs, and boost economic resilience. 'Key priorities should include reducing the public sector's role in the economy and ensuring a level playing field. Implementing the State Ownership Policy and asset divestment programme—especially in sectors where the state has pledged to scale back—will be critical in strengthening private sector contributions to growth. At the same time, improving the business environment must continue.' 'We appreciate the warm hospitality extended by the Egyptian authorities. Virtual discussions will continue to finalize agreement on the remaining policies and reforms required to complete the fifth review,' she concluded. Follow us on: Facebook Instagram Whatsapp Short link:
See - Sada Elbalad
21-05-2025
- Business
- See - Sada Elbalad
Sterling Pound Rises to Three-year High after Faster-than-expected Inflation in UK
Taarek Refaat The sterling pound rose 0.58% on Wednesday to $1.347, its highest level since February 2022, though it was broadly stable against the euro, trading at 84.325 pence. This was driven by faster-than-expected UK consumer price inflation in April, reducing the Bank of England's ability to cut interest rates quickly to protect growth. The Office for National Statistics announced that consumer prices rose by 3.5 percent in April, up from 2.6% in March. This is the highest level since January 2024 and the largest increase since 2022, when inflation was rising sharply. British Chancellor Rachel Reeves said she was "disappointed" with the data, saying in a statement: "I know that cost-of-living pressures continue to weigh heavily on working people." There were expectations of a sharp rise in prices last month, driven by increases in water, gas, and electricity bills. The Office for National Statistics said higher airfares contributed to the higher data. Worryingly, services inflation, which measures domestic price pressures, rose by 5.4% in April, exceeding even the highest forecast in a Reuters poll of 4.8% and exceeding the BoE's 5 percent forecast last month. Wednesday's data will increase concerns among Monetary Policy Committee members about the outlook for the UK economy, which grew strongly in early 2025 but is likely to slow in the second half of the year. read more CBE: Deposits in Local Currency Hit EGP 5.25 Trillion Morocco Plans to Spend $1 Billion to Mitigate Drought Effect Gov't Approves Final Version of State Ownership Policy Document Egypt's Economy Expected to Grow 5% by the end of 2022/23- Minister Qatar Agrees to Supply Germany with LNG for 15 Years Business Oil Prices Descend amid Anticipation of Additional US Strategic Petroleum Reserves Business Suez Canal Records $704 Million, Historically Highest Monthly Revenue Business Egypt's Stock Exchange Earns EGP 4.9 Billion on Tuesday Business Wheat delivery season commences on April 15 News Egypt confirms denial of airspace access to US B-52 bombers News Ayat Khaddoura's Final Video Captures Bombardment of Beit Lahia News Australia Fines Telegram $600,000 Over Terrorism, Child Abuse Content Arts & Culture Nicole Kidman and Keith Urban's $4.7M LA Home Burglarized Sports Former Al Zamalek Player Ibrahim Shika Passes away after Long Battle with Cancer Sports Neymar Announced for Brazil's Preliminary List for 2026 FIFA World Cup Qualifiers News Prime Minister Moustafa Madbouly Inaugurates Two Indian Companies Arts & Culture New Archaeological Discovery from 26th Dynasty Uncovered in Karnak Temple Business Fear & Greed Index Plummets to Lowest Level Ever Recorded amid Global Trade War Arts & Culture Zahi Hawass: Claims of Columns Beneath the Pyramid of Khafre Are Lies
