Egypt Accelerates Asset Divestment Under Financing and International Reform Pressure

Under pressure from the International Monetary Fund to reduce the Egyptian state’s role in the economy, the government announced in early June that it would offer stakes in several state-owned companies on the stock exchange before the end of September. Four major divestment transactions were expected to generate approximately $1.5 billion.

At a press conference, Prime Minister Mostafa Madbouly said the government had completed provisional listings for 16 state-owned companies, with four more planned before June 30. Provisional listing procedures had begun for ten petroleum-sector companies. The government aimed to offer four or five state-owned companies on the exchange before the end of 2026.

Egypt is intensifying efforts to divest companies and public assets, either by selling stakes to strategic investors or through stock-market offerings. The program forms part of broader reforms Cairo committed to under an $8 billion IMF financing agreement, including strengthening the private sector and reducing direct state involvement in economic activity.

The Fund calls for urgent structural reforms: faster divestment from non-strategic public enterprises, better public-debt management, uniform governance in state banks and companies, higher non-oil tax revenue and less government intervention to support the private sector. Targets cited in the report envisage growth of 4.8% and inflation falling to 11.9% during 2026.

Deputy Prime Minister Hussein Eissa said the government aimed to complete ten divestment transactions in the coming period as part of the State Ownership Policy and efforts to expand the private sector’s role. Speaking at the American Chamber of Commerce’s annual meeting, he said officials hoped to complete two new transactions from among four military-owned companies and another six before year-end, bringing targeted companies to around ten.

In a recent step, the government announced the sale of the Gabal El-Zeit wind farm on the Red Sea to Emirati company Alcazar for $420 million. The Arabic report describes a roughly $150 million loss compared with $567.4 million in investment costs. The arithmetic difference is $147.4 million; a comparison between initial cost and sale proceeds alone does not establish the project’s full lifetime accounting loss. The government said proceeds would reduce debt.

In April, the Financial Regulatory Authority announced provisional exchange listings for six state-owned companies to prepare stake offerings under the IMF program: El Nasr Glass and Crystal, Alexandria Refractories, El Nasr Mining, Egyptian Ferroalloys, Egyptian Pipes and Cement Products (Siegwart), and El Nahda Industries. The first four belong to the Metallurgical Industries Holding Company; the latter two to the Chemical Industries Holding Company.

This followed the fifth and sixth IMF reviews completed in February. The Fund noted that state divestment had slowed over the previous two years while new entities affiliated with state bodies had emerged.

In May, Hashem El-Sayed, the prime minister’s assistant and head of the State-Owned Enterprises Unit, said international institutions had observed that implementation of the State Ownership Policy had not adhered to its divestment or stabilization commitments. The government was addressing those gaps through clear implementation programs, he said.

Why is divestment delayed?

Walid Gaballah, a member of the Egyptian Society for Political Economy, Statistics and Legislation, tells Zawia3 that slow implementation of the offerings program does not indicate government retreat or hesitation. The program has been part of the state’s economic agenda for years, he says, but the government wants “fair divestment” that secures the best possible asset value.

Gaballah argues that global economic conditions are unfavorable. Declining foreign direct investment flows affect countries’ capacity to attract investment, not Egypt alone. The state is waiting for opportunities to offer assets and companies in a way that maximizes returns, he says.

He considers continued postponements evidence that the government is implementing structural reform according to high standards of governance and fairness. Had it wanted a rushed or poorly studied exit, he argues, it could have done so years ago.

Economics and political-science professor Alia El-Mahdi takes a different view: the time is right to divest. International institutions, led by the IMF, have advocated this direction for years. The appropriate time for reform is when the state decides to implement it, she says. Delays caused by incomplete procedures or documents are technical matters separate from the seriousness of the decision.

El-Mahdi tells Zawia3 that offerings and divestment can include clear conditions protecting employment, requiring new investment and preventing layoffs to limit potential harm. If the government acts prudently and attentively, she argues, citizens need not experience a direct adverse effect.

Mohamed Ramadan, an economic researcher at the Egyptian Initiative for Personal Rights, says the offerings program should not be seen simply as a response to IMF pressure. Selling companies is complex and time-consuming because it requires restructuring, asset valuation and suitable investors, whether through direct sales or public offerings.

Ramadan says the government does not reject sales or divestment in principle, pointing to stakes sold in major companies in recent years. It may, however, find that land and real-estate transactions such as Ras El-Hekma generate larger dollar receipts than company stake sales.

He links the divestment wave in 2022 and 2023 to financing pressures that pushed the state to accelerate sales, attract dollar inflows, support the balance of payments and secure external funding.

Economist Ibrahim Mostafa, a former deputy chair of the Suez Canal Economic Zone, agrees that technical and procedural challenges are complex and require considerable time and effort. Companies need accurate valuations, due diligence and comprehensive reviews of documents and financial statements before being presented to investors.

He tells Zawia3 that identifying state-owned companies is not new: government bodies have held information about them for years. The exercise extends beyond public-business-sector companies to networks affiliated with different ministries and joint ventures, making inventory, valuation and selection more complicated.

Preparing a single company for an offering can take six months to a year, Mostafa says. It involves reviewing financial statements and legal records, appointing advisers and studying assets, employment and financial liabilities. These files require complicated negotiations and procedures that cannot be completed quickly.

By the end of 2023, Madbouly said the government had generated $5.6 billion from state-company divestments to involve the private sector despite Egypt’s difficult economic conditions, while targeting further offerings.

Warnings and priorities

El-Mahdi cautions against further asset sales to Emirati investors, given the already substantial scale of Emirati investment in Egypt. Egyptian investors offer an alternative, she says. Vital strategic and development projects should nevertheless remain state-owned, with no need to divest projects tied to national security.

She rejects selling land to foreigners, particularly coastal land, considering it a national-security matter. At the same time, she believes private operators can efficiently manage ordinary industrial and commercial activities where the state chooses to withdraw.

Public offerings are preferable to sales to a single investor, El-Mahdi argues. Selling shares to the public broadens participation, prevents ownership from concentrating in one party’s hands and allows citizens and investors to acquire different-sized stakes.

Ramadan says exchange listings offer benefits beyond liquidity. They strengthen governance, transparency and disclosure, making them preferable to closed sales to strategic investors.

Mostafa sees the issue as one of priorities rather than the principle of an offering. Companies should be selected according to the economy’s needs, market conditions, readiness and capacity to attract investors, regardless of their parent authority.

The program aims to reduce the budget deficit and allow greater domestic and foreign private-sector participation, he says. Continued state management of loss-making or inefficient companies adds burdens to public finances. Alternatives include privatizing management or offering partial or full ownership, based on specialized studies and clear criteria.

How is the government advancing divestment?

As part of reorganizing state-company assets, the government abolished the Public Business Sector Ministry in the February cabinet reshuffle after decades of operation. It said the aim was to rescue public companies from collapse and preserve their role in employing millions of Egyptians.

Madbouly said the decision reflected a vision discussed for years: the ministry’s role was transitional rather than permanent. When appointing the previous minister, he said, he had warned that the ministry might be entering its final phase, with reorganization preparing the sector for a new stage.

The ministry had overseen 146 state-owned companies across several sectors—roughly 26% of the 561 state-owned enterprises counted in a government document in July 2025. Six holding companies covered tourism and hotels, pharmaceuticals, chemicals, metallurgy, textiles and construction. The document classified around 75% of the ministry’s companies as profitable and 25% as loss-making.

The government also established the State-Owned Enterprises Unit, a central body attached to the cabinet. It inventories and values public companies and identifies candidates for divestment, exchange listings or transfer to the Sovereign Fund of Egypt. It sets uniform board-governance rules and requires quarterly reports, under the prime minister’s assistant.

The Egyptian state owns approximately 561 companies operating in 18 economic activities. They belong to 45 government bodies, including 19 ministries and ten authorities, and operate across 16 governorates. Manufacturing leads with 175 companies, followed by administrative and support services with 77, transport and storage with 50, finance and insurance with 49, and real estate with 48.

This distribution reflects structural changes associated with the State Ownership Policy. The state-company count fell in 2025 from 709 to 561—a decline of 148, or 20.9%—while the number of owning bodies increased from 33 to 45, indicating a reorganization of ownership and public assets.

Five holding companies recorded net profits in the 2025 figures cited by the report. Metallurgical Industries Holding led with EGP 61.8 billion in revenue, including approximately EGP 36.6 billion in exports. Construction and Development Holding revenue exceeded EGP 22.6 billion. Cotton, Spinning and Weaving Holding recorded a net loss of roughly EGP 4.6 billion.

Returns varied. The Arabic text reports return-on-assets figures of 15.2% for Pharmaceuticals Holding, 26.3% for Metallurgical Industries Holding and 4.3% for Construction Holding. Although it calls pharmaceuticals the highest, the quoted 26.3% metallurgy figure is larger; the ranking is therefore not reproduced. Chemical Industries Holding’s net profit fell to around EGP 2.9 billion from higher levels in earlier years, while Tourism Holding reported no losses among its subsidiaries for the first time in years.

Metallurgical Industries Holding led implemented investment at roughly EGP 3.8 billion, followed by Chemicals at EGP 2.3 billion and Pharmaceuticals at EGP 1.5 billion. Construction Holding invested approximately EGP 322 million. Tourism Holding had paid more than EGP 2.17 billion to bodies described in the source as sovereign entities by the end of 2025.

The government is operating amid overlapping economic crises and a growing repayment bill. International estimates cited in the report place obligations—particularly external debt—at around $60–70 billion during 2026, with substantial first-quarter principal payments. Such estimates depend on coverage and treatment of short-term or rolled-over liabilities; they should not be read as identical to narrower medium- and long-term schedules. The burden increases short-term financing needs and sensitivity to external shocks or disrupted capital flows.

Despite the government’s announcement that debt relative to GDP fell by around 12% over two years, and Standard & Poor’s first credit-rating upgrade in seven years in October 2025, servicing costs remain acute. Figures cited in the report put debt service at around 50% of public expenditure and 72% of revenue in 2024/2025, among the highest ratios in comparable countries.

Facing heavy external commitments and rising financing pressure, Egypt is accelerating public-company and asset divestment as a pillar of its IMF-linked reforms. The government presents offerings as a way to restructure the economy and strengthen private participation. Debate continues over timing, asset selection and the consequences for the domestic economy and social justice.