From Selling Assets to Financing with Them: How State Property Became a Debt-Management Tool

Reports published on June 10, 2026 said that presidential measure No. 222 of 2026 allocated state-owned land in the Red Sea governorate to the Finance Ministry for sovereign sukuk issuance. The area is approximately 26,690.45 feddans, or 112,122,142 square meters. The Arabic article refers to June as the current month, although its publication date is September; the calendar date is made explicit here.

Under Law No. 138 of 2021, sovereign sukuk are equal-value, registered government securities tradable on the exchange, issued for a fixed period of no more than thirty years and representing undivided shares in asset-use rights. Unlike conventional bonds, they rely on contracts compliant with Islamic law, such as leasing or cost-plus sale arrangements, rather than conventional interest. They finance projects, budget gaps or economic activity.

Alongside asset-backed sukuk, Egypt aims to issue approximately $4 billion in international bonds during 2026/2027 to meet external-financing needs, Finance Minister Ahmed Kouchouk has said. It also completed a $1.5 billion international sovereign sukuk issue within a program targeting $5 billion in issuance; the report refers to a three-year tenor.

Using Red Sea land to support sovereign sukuk raises a question: are these assets financing safeguards for creditors, or another way to dispose of public assets under more attractive terminology?

The Finance Ministry has denied that the land allocation means selling it. Its linked statement, dated June 12, 2025, says the land remains state-owned and is to be used and developed, with part supporting sukuk issuance and debt reduction. It describes more diverse financing and investor participation, improved fiscal conditions and room for social protection, health, education and development spending. This is an earlier statement, not a new September 2026 announcement.

Hazem Hassanein, a member of the Egyptian Society for Political Economy, says debate about state withdrawal should begin with its economic role and identity. Pure free-market models no longer describe major economies, he argues: governments intervene through subsidies, welfare, industrial policy and labor regulation.

He tells Zawia3 that developing countries often adopt international institutions’ prescriptions without assessing local suitability. “Does state withdrawal from economic activity actually suit Egypt?” He points to the stabilization and structural-adjustment program from the early 1990s to 2008, of which privatization was a major component, and calls for reviewing its economic results before expanding current divestment.

On sukuk backed by public assets, Hassanein says foreign-currency needs are steering financing toward overseas investors. The crucial question is how proceeds will be used: repaying debt or financing productive investment capable of generating future economic returns.

Divestment should not be an end in itself, he argues. A clear assessment should explain why the state exits an activity and whether doing so improves efficiency and competition. He cites Romania as an example where, in his account, some exits produced more concentrated markets and fewer alternatives in industries such as steel.

Foreign investors do not look solely for asset sales or state withdrawal. They seek macroeconomic stability, competition and lower exchange-rate, inflation and geopolitical risks, Hassanein says. Recent divestment, in his view, has centered on public-asset sales to obtain dollars rather than development.

Economic researcher Ahmed Khattab considers the allocation of land to support sovereign sukuk a way to strengthen confidence in government financing and reassure investors that the state can meet obligations to sukuk holders.

He tells Zawia3 that fixed assets such as land enhance an issuance’s credibility and investment value. Investors view them as safeguards strengthening the instrument and reducing its risks.

Khattab calls the arrangement an additional incentive for Arab and foreign investors to become strategic partners in state projects, particularly tourism, which he says retains considerable capacity for growth.

The northern coast from El-Alamein to Matrouh, alongside Marsa Alam, Sharm El-Sheikh, Hurghada, Nuweiba, Oyoun Moussa and Ain Sokhna, offers opportunities for foreign investment in hotels, resorts and rooms, he says. These complement heritage destinations such as Luxor and Aswan, which attract visitors interested in archaeology and history.

Public assets: is the state a failed manager?

Hassanein says sovereign sukuk are widely used, especially in Southeast Asia and the Gulf, and can offer investors good returns. They differ from directly selling assets.

The distinction should be between ordinary assets that can be used for a fixed period and recovered, and strategic or vital assets underpinning the national economy. The fundamental issue is whether sukuk serve genuine investment or indirectly dispose of public property.

Asset sales or using sukuk proceeds to repay debt raise questions about public assets’ economic role. Borrowing should fund productive projects whose future returns help service debt, rather than relying on asset disposal to cover existing commitments, he argues.

Ras El-Hekma was financially successful in the volume of resources received, Hassanein says, but raises questions about losing strategically valuable assets and repeating that approach elsewhere.

Abdel Monem El-Sayed, director of the Cairo Center for Economic Studies, says the most significant shift in the new State Ownership Policy is from “leaving the economy” to redefining the state’s economic role.

He tells Zawia3 the aim is no longer merely to sell public assets, but to manage them more efficiently while creating greater space for the private sector to lead activity and growth.

The state is moving toward a regulating and enabling role while retaining a presence in strategic and sovereign sectors connected to national security and vital interests, El-Sayed says.

Hassanein notes that withdrawal in developing countries often relates to international financing conditions, but should not become a permanent policy or objective. A sustainable economy needs a broader production base and less dependence on borrowing and external funding.

Addressing crises requires a relatively independent development strategy that increases the economy’s ability to meet basic needs and domestic production, rather than continually relying on external resources and international finance.

Successful divestment requires a strong, competitive private sector and removal of bureaucratic and administrative barriers, he says. Long, complicated licensing procedures encourage domestic and foreign investors to seek easier markets.

Attracting foreign investment starts with improving conditions for local investors. An overseas investor will not readily enter a market where national businesses struggle to establish, operate and expand, Hassanein argues. Government should communicate confidence rather than simply an image of withdrawal.

Sales amid mounting concerns

Economics and political-science professor Alia El-Mahdi warns that sukuk linked to public land can open the door to foreign ownership of Egyptian assets. She does not consider that investment in itself and asks whether Egyptians will have ownership opportunities in these areas.

She tells Zawia3 that expanding land sales poses national-security risks. Instead, the state could grant use rights for thirty to fifty years, with a strict maximum and a prohibition on permanently selling the underlying land.

Land sales under any label infringe future generations’ rights, she argues. “What will we leave our children and grandchildren if we sell all the prime land?” She warns that repeated borrowing against land could create a path toward nonpayment while protecting holders’ claims to it.

Khattab responds that land ownership does not transfer to sukuk holders; it remains with the state while supporting the issuance. Sukuk have a fixed term, after which investors recover principal and agreed returns. Investors may also sell securities if their market value rises, gaining additional profits relative to other savings instruments.

He expects Egyptian sovereign sukuk terms to range between three and five years depending on financing needs. Longer terms give government more time to use funds and generally affect returns. Most participants, he says, are Arab or foreign investors prepared to commit funds for a fixed period rather than seek immediate liquidity.

Hassanein shares El-Mahdi’s concern about repeatedly selling assets or using sukuk receipts to repay debt. That can entrench a model of borrowing followed by asset disposal to meet commitments, rather than building sustainable sources of production and growth.

Any planned divestment involving social or service assets, such as Nasser Institute Hospital, should first present clear alternatives guaranteeing continued services, he says. The state’s role extends beyond economics to basic services and protection of vulnerable groups.

He considers the main problem a missing long-term production vision rather than a shortage of financing instruments. Finance generates substantial successes and profits, but these have not sufficiently translated into a real economy based on production and exports.

In recent years, he says, property and financial activities gained prominence while productive sectors capable of creating value and lasting jobs lost importance. Future development requires rebuilding productive foundations and industries where Egypt has comparative advantages.

Economist Medhat Nafea says assigning Red Sea land to the Finance Ministry is more than an administrative step. It changes the philosophy of public-asset management from keeping a strategic reserve to using assets as instruments supporting public finance.

He tells Zawia3 the aim is to maximize economic value, improve borrowing terms and attract international-market financing, especially through sovereign sukuk.

The approach can provide short-term fiscal breathing space, he argues, but raises questions about protecting assets’ economic and strategic rights in the future. It requires the highest levels of transparency, disclosure and institutional oversight.

Khattab rejects the idea that foreign involvement in projects based on Egyptian land or assets is inherently threatening. The goal is investment supporting development and employment rather than leaving land unused. Coastal and tourist areas can become productive and service centers that generate jobs and cash flows.

He points to the State Ownership Policy as a broader framework for private participation. Arab or foreign investors do not, in his view, threaten sovereignty: land remains subject to Egyptian law, and the state has legal and regulatory tools to protect assets and national control.

Debt in exchange for assets

Khattab sees no inherent danger in linking public financing instruments to state assets. The priority is investor confidence and foreign capital amid regional and international competition. He notes that many countries, including Gulf states, have expanded foreign ownership and investment policies.

He considers current developments a natural evolution in asset management. Economic policies cannot stay unchanged for decades in a rapidly changing world. Egypt is adapting financing and investment practices used successfully elsewhere to its economic and demographic circumstances, rather than inventing unprecedented models.

Economic strategies require regular review to respond to international, technological and development changes. Success depends on adapting quickly and selecting instruments that efficiently attract investment and growth, he says.

Hassanein says successful state withdrawal requires a clear alternative and an investment roadmap giving local investors confidence and incentives to expand production. Weak business confidence damages both domestic and foreign investment decisions.

Investors increasingly favor property, gold and assets that preserve value or deliver quick returns, he says. That raises a fundamental question about the real economy’s capacity to attract capital into production and manufacturing.

Egypt has two basic production resources—land and labor—but organization and efficient economic management remain the central problem, Hassanein argues. Capital naturally flows toward stability, clarity and credible returns.

Business conditions should improve before divestment expands: fair competition, fewer administrative complications and stronger trust between state and investors can support a productive and technological base for sustainable growth.

Continued dependence on rent-generating and property activities without developing production can weaken real investment and narrow growth to sectors that cannot sustain long-term development or improve living standards, he warns.

Divestment should be evaluated against macroeconomic goals, particularly higher output, jobs and reduced inflationary pressure, Hassanein says. These should be the criteria for judging any withdrawal program.

He sees substantial opportunities in glass, oils, metallurgy, automotive manufacturing and supplier industries. He advocates partnership between the state and private sector rather than relying only on withdrawal or quick financial solutions.

Prioritizing finance over the real economy can allow inflation to erode returns without sustainable development. The missing priority, he says, is modern productive capacity based on technical education, natural resources, tourism and manufacturing. Attracting foreign currency should not come at the expense of domestic demand and production.

The discussion points to a broader lesson: asset sales alone cannot deliver expected results where production remains weak. Liberalization needs businesses capable of competing domestically and internationally. Bureaucracy, corruption and administrative and logistical barriers in Egypt’s business environment must be addressed if private investment is to thrive.