Egypt implements $2.5B deals to exit state within “IPO” program

Egypt has started implementing deals, valued at approximately $2.5 billion, to pull out from state-owned companies as part of its Initial Public Offering (IPO) program during the fiscal year 2023/2024. This step was confirmed by Finance Minister Mohamed Maait with the primary goal of enhancing foreign exchange flows and acquiring the necessary foreign financing to support the needs of the Egyptian economy. The minister further added that such a move will continue to help in achieving a primary surplus and growth in tax revenues. This decision also aims to take on more structural reforms and measures during the upcoming period to cope with internal and external economic challenges. This news comes ahead of Standard & Poor’s downgrade of Egypt's credit rating from 'B' to 'B-' in both local and foreign currencies with a stable long-term outlook, while keeping the short-term credit rating at 'B'. Despite this, Standard & Poor's predicts the government will continue its economic reform program. The minister also noted that accelerating the 'offerings' program in the future can help in increasing Egypt's sovereign rating. The aim is to enable Egypt to cover its financing and external needs in the next two years, reducing the need for external finance, and thereby decreasing the national debt service bill. This, he believes, will increase investor and institution confidence in the ability of the Egyptian economy to manage external challenges. Standard & Poor’s experts acknowledged the continued financial discipline and ability to pay growth rates in tax revenue.