Egypt passes $11 bln sovereign wealth fund
5 bln pound capital approved
CAIRO, July 17, (RTRS): Egypt is setting up a sovereign wealth fund with a capital of 200 billion Egyptian pounds ($11 billion), the state news agency said on Tuesday.
Former Public Enterprise Minister Khaled Badawi said in March that Egypt was discussing setting up a sovereign wealth fund to manage state companies it plans to list on the stock exchange.
The agency, MENA, did not specifically mention the privatisation programme, but said: “The fund aims to contribute to sustainable economic development through management of its funds and assets.”
The fund will be eligible to participate in all economic and investment activities, including setting up companies, investing in financial instruments, and other debt instruments in Egypt and abroad, the statement said.
The law, passed by parliament on Monday, approved a 5 billion Egyptian pound start-up capital for the fund called “Egypt Fund”, with 1 billion pounds to be transferred immediately from the treasury, MENA said.
Al-Borsa, a local financial newspaper, quoted Amr el-Gohary, a member of the parliament’s economic committee, as saying that the balance from the start-up capital will be paid over three years as part of the government investment plans.
MENA said the law allowed the president to transfer ownership of any unutilised state assets to the fund or any of its subsidiaries.
It gave no details of when it the fund was envisaged to reach 200 billion Egyptian pounds.
Egypt’s parliament last year passed a long-delayed investment law to streamline doing business in Egypt and to create incentives it hopes will bring back investors’ dollars after years of turmoil.
Egypt floated its pound currency in November 2016 under a three-year $12 billion IMF programme tied to ambitious economic reforms, part of a bid to restore capital flows that dried up after its 2011 uprising drove away investors and tourists.
Meanwhile, yields on five- and tenyear Egyptian government bonds fell at auction on Monday, marking a further decline in the country’s debt costs after they hit roughly one-year highs earlier this month.
Five-year yields fell to 17.65 percent from 17.76 percent at the last sale on July 2, central bank data showed. Yields on the 10-year bonds fell to 17.18 percent from 17.86 percent at the last sale, also on July 2.
Egypt’s short and long-term treasury yields had been climbing since April, fuelled by what bankers and economists said was an exit of foreign investors amid a broader global selloff in emerging markets.
Egypt was one of the world’s hottest destinations for portfolio investors last year after short-term yields touched 22 percent, the result of aggressive central bank rate hikes aimed at curbing inflation.
Total foreign holdings of Egyptian treasuries hit $23.1 billion at the end of March, according to official data.