Egypt selling government assets to the UAE

In a move that reveals the urgent need for foreign currency in Egypt, Abu Dhabi’s sovereign wealth fund has agreed to invest about $2 billion in Egypt by buying stakes in state-owned assets in some companies, including the largest private bank listed on the Egyptian Stock Exchange, according to informed sources quoted by Bloomberg.

The move, in addition to the devaluation of the Egyptian pound two days ago, comes as one of the mechanisms for providing foreign currency, as Egypt is suffering from a severe shortage as a result of the withdrawal of indirect foreign investments due to the global economic crisis caused by the Russian-Ukrainian war.

According to the sources, the deal includes the purchase of state-owned shares in some companies and banks, including 18 per cent of the Commercial International Bank, as well as government shares in four companies listed on the stock exchange, including Fawry Banking and Payment Technology Services.

READ: UAE, Egypt agree on $2bn investment deal

Enterprise quoted government sources saying that the Egyptian government is not expected to resort to obtaining new deposits from the GCC countries but indicated that there is a desire among policy makers to extend Gulf deposits in the Central Bank of Egypt, which are believed to amount to about $15 billion.

Instead, policymakers will speed up the process of offering attractive state assets for sale to Gulf buyers by bringing new assets to the market and selling additional stakes in listed companies controlled by the government.

Major cash crisis

It appears that the decision to depreciate the pound against foreign currencies is not sufficient to guarantee cash flows and compensate for the shortage in foreign assets at local banks, as they fell to negative levels. This put pressure on the value of the local currency, as net foreign assets amounted to negative $7.1 billion at the end of November, according to the data of the Central Bank of Egypt.

As international financial institutions warned, credit rating agency Fitch warned that the conflict in Ukraine would lead to reduced tourism inflows, higher food prices and greater financing challenges.

OPINION: Is the UAE qualified to be a superpower?