What’s Up in Egypt? Short updating reports on the most strategic news about the Egyptian affairs
WSJ reported Egyptian and Saudi officials saying Saudi Arabia and other Gulf countries conditioned the resumption of their financial rescue package to the sluggish Egyptian economy with firm changes involving further devaluation of the Egyptian pound and reshuffling the economic officials in Egypt. The report followed an abrupt brief visit late at night by the Egyptian leader Abdel Fattah al-Sisi to the Saudi de facto ruler, crown prince Mohamed bin Salman. Gulf countries’ acquisition of state-owned assets in Egypt was involved in the Egypt-IMF agreement concluded last December and provided USD 3 billion in loans to Egypt disbursed over 2.5 years plus catalyzing USD 14 billion in additional finance from the Gulf’s other regular international regular creditors. After years of easy funding, Gulf countries have been disappointed by Egypt’s imprudent spending under Abdel Fattah al-Sisi. With the Muslim Brotherhood’s political threat, declining since 2013, economically oriented thinking dominated the Gulf countries’ treatment of Egypt’s financial needs.
Since the Russian-Ukrainian war, some Gulf acquisitions of Egyptian enterprises have been concluded. Still, deals started recently to be crippled by disputes over pricings and the fair value of the Egyptian pound. While hitting 41.15 pounds for the dollar for 12-month futures, CBE is still keeping the rate at 30.9 EGP/USD despite the pledge to the IMF to maintain a flexible exchange rate and not to fund a stable exchange rate for the pound against the dollar. Gulf investors, annoyed by the overvaluation of the pound, hold back from acquisitions of overpriced assets.
Reluctance to let a fair exchange rate of the pound and offer majority shareholders in most companies cast doubt on the performance of Egyptian economy senior navigators. Preferring to keep the last word on economic policies in his hands, the Egyptian leader Abdel Fattah al-Sisi excluded competent experts, who could be annoying. Egypt Watch was told that Mahmoud Mohieldin, former Egyptian investment minister and incumbent executive director in the IMF, was excluded from the PM candidacy after demanding more independence in managing the national economy.
Gulf investors demand more professional experts who can make final decisions. In accordance, Zat Masr, an Emirati-funded news website, reported Rashid Mohamed Rashid, another former minister of industry and trade under Mubarak known for his relations with Emirati and Qatari royal families, is close to taking office as PM after the end of the Islamic holy month of Ramadan. With a $6-billion financial gap until July 2023, Egypt’s government hopes to reap $2 billion from the ongoing divestment of state-owned assets to Gulf investors before the deadline. Deals are negotiated under pressing strains, putting the steer under the control of the buyers, not the sellers.