Egypt and the World Bank's International Finance Corporation signed a five-year partnership on Sunday, with the Washington-based agency chosen as the Arab nation's “strategic” consultant for its programme of selling stakes in state enterprises to private investors.
The agreement, signed by IFC managing director Makhtar Diop and Egypt's Minister of International Co-operation Rania Al Mashat, marks the government's first significant step towards implementing its initial public offering plan for 32 state-owned enterprises.
Cairo announced the privatisation plan, billed to be a major step in reviving the economic momentum, in January. However, it is said to have attracted lukewarm interest from investors because of uncertainty surrounding the Egyptian pound's exchange rate.
Under the agreement, the IFC will provide technical support for the government's privatisation programme and help with the restructuring of companies selected for IPOs to make them more attractive, a cabinet statement on Sunday said.
Prime Minister Mostafa Madbouly, who attended the signing ceremony, said the agreement would accelerate the privatisation process and improve the management of the state enterprises on offer.
“The choice of the IFC as the government's strategic consultant for the IPOs allows the use of its accumulated expertise in empowering the private sector in emerging markets,” he said.
The January announcement came shortly after the International Monetary Fund agreed to give Egypt a $3-billion loan to shore up its finances.
The IMF's conditions included a reduction of the state's footprint in the economy, allowing the private sector a larger role, and the adoption of a flexible foreign exchange system that leaves demand and supply to determine the value of the Egyptian pound.
The pound, devalued three times since early last year, has been stable for months, at around 30 to the dollar at banks, but as high as 40 in the black market. A persistent dollar crunch has also meant suppressed imports that have led to shortages and hit local industries dependent on foreign materials.
The 32 state enterprises on offer include two banks and two military-owned companies.
President Abdel Fattah El Sisi, in charge of the economy since taking office in 2014, has ruled out another devaluation of the pound, arguing that such a move would place an unbearable burden on most Egyptians facing with skyrocketing prices.
The Egyptian leader has yet to say whether he will seek a second and final six-year term in office when elections are held next year but he is widely expected to do so.
In a series of campaign-like public appearances last week, he doggedly defended his handling of the economy and appeared determined to press ahead with the mega infrastructure projects critics have said are among the main reasons for the nation's financial woes.