{"id":16747,"date":"2026-09-02T08:49:24","date_gmt":"2026-09-02T06:49:24","guid":{"rendered":"https:\/\/zawia3.com\/?p=16747"},"modified":"2026-10-24T19:38:52","modified_gmt":"2026-10-24T17:38:52","slug":"investing-the-assets-or-selling-them","status":"publish","type":"post","link":"https:\/\/zawia3.com\/en\/investing-the-assets-or-selling-them\/","title":{"rendered":"From Selling Assets to Financing with Them: How State Property Became a Debt-Management Tool"},"content":{"rendered":"

After its presidential<\/span> ratification<\/span><\/a>, on 10 June 2026, the Official Gazette published Law No. 222 of 2026, allocating a state-owned plot of land on the Red Sea to the Ministry of Finance for issuing sovereign sukuk, with an area of about 26,690.45 feddans (112,122,142 square metres).<\/span><\/p>\n

Sovereign<\/span> sukuk<\/span><\/a> are defined under<\/span> Law<\/span><\/a> No. 138 of 2021 as “registered government securities of equal value, tradable on the stock exchange, issued for a specified period not exceeding 30 years, and representing undivided shares in usufruct rights over assets”. Unlike conventional bonds,<\/span> sukuk<\/span><\/a> rely on Sharia-compliant contracts such as ijara and murabaha instead of interest, while they are used to finance projects, cover the budget deficit or support the economy.<\/span><\/p>\n

As the state turns to issuing sukuk backed by land, it is also targeting the issuance of international bonds worth about $4 billion during the 2026-2027 fiscal year to meet its external financing needs, according to<\/span> statements<\/span><\/a> by Minister of Finance Ahmed Kouchouk. It also recently completed the<\/span> issuance<\/span><\/a> of international sovereign sukuk worth $1.5 billion, in a programme targeting issuances of about $5 billion over 3 years.<\/span><\/p>\n

The issuance of sovereign sukuk backed by land on the Red Sea raises questions about whether these assets will turn into a guarantee instrument for creditors, or whether it is the other face of selling state<\/span> assets<\/span><\/a>, in a more splendid guise and in finer-sounding terms.<\/span><\/p>\n

The Ministry of<\/span> Finance<\/span><\/a> denied that the issuance of sovereign sukuk aims to sell assets; rather, according to the ministry, it is meant to create new financing instruments to diversify the investor base, achieve financial, economic and development targets, and provide allocations for investment projects to spend on improving citizens’ living standards.<\/span><\/p>\n

<\/span><\/p>\n

<\/span>Dr Hazem Hassanein, a member of the Egyptian Society for Political Economy, says the debate on the state’s exit from economic activity must first start by defining the state’s role and its economic identity, explaining that the world no longer knows the model of “the pure free-market<\/span>economy<\/span><\/a>“, since governments in major economies must intervene through subsidies, social welfare, industrial policies and labour laws.<\/span><\/p><\/blockquote>\n

He adds to Zawia3 that developing countries often adopt the prescriptions of international institutions “without assessing how suitable they are for their local conditions”, asking: “Does the model of the state’s exit from economic activity really suit the Egyptian case?” He points out that Egypt implemented the economic<\/span> stabilisation<\/span><\/a> and structural adjustment programme from the early 1990s until 2008, with privatisation as one of its main pillars, noting that the<\/span> experience<\/span><\/a> calls for a review of its economic results before expanding policies of exiting current assets.<\/span><\/p>\n

Commenting on the use of public assets in issuing sovereign sukuk, Hassanein says the state’s foreign currency needs have become a major factor in steering these instruments towards foreign investors, pointing out that the most important<\/span> question<\/span><\/a> concerns how the proceeds of these issuances will be used, and whether they will be directed to repaying debts or to financing productive investments that generate future returns for the economy.<\/span><\/p>\n

Hassanein considers that the state’s exit from its assets should not be viewed as a goal in itself, but must be built on a clear assessment of the reasons for the state’s withdrawal from any economic activity, and whether this will improve efficiency and strengthen market competition. He points out that some countries’ past exit experiences did not, in his view, lead to positive results, such as Romania, citing what he described as the transformation of some local markets into more monopolistic conditions and the absence of alternatives in a number of industries such as steel.<\/span><\/p>\n

He adds that the foreign investor is not attracted solely by the sale of assets or the state’s exit, but looks for macroeconomic stability, the availability of competition, and low exchange-rate, inflation and geopolitical-tension risks. He points out that exit policies in recent years have been linked only to the sale of public assets, considering that their main goal is to provide dollar resources for the state, not development.<\/span><\/p>\n

For his part, economic researcher Dr Ahmed Khattab says allocating land to the Ministry of Finance to be used as assets supporting sovereign<\/span> sukuk<\/span><\/a> issuances is a step he described as one that “aims to strengthen confidence in government financing instruments and send a reassuring message to investors about the state’s ability to meet its financial obligations and pay sukuk holders their dues”.<\/span><\/p><\/blockquote>\n

He explains to Zawia3 that the presence of fixed assets, such as land, as cover for sukuk raises their credibility and investment value, as investors view these assets as a guarantee that strengthens the financing instrument and reduces the risks associated with it.<\/span><\/p>\n

He describes this step as “an additional incentive for foreign and Arab investors to enter as strategic partners in state projects, especially given the investment opportunities available in the tourism sector, which still has large absorptive capacity for growth and expansion”.<\/span><\/p>\n

He continues that the North Coast areas stretching from El Alamein to Matrouh, alongside Marsa Alam, Sharm El-Sheikh, Hurghada, Nuweiba, Ayoun Moussa and Ain Sokhna, still hold wide opportunities to attract more foreign direct investment in hotels, resorts and tourist rooms, away from archaeological destinations such as Luxor and Aswan, which attract categories of tourists interested in heritage and antiquities.<\/span><\/p>\n

<\/span><\/p>\n

On assets: is the state a failed manager?<\/b><\/h1>\n

Dr Hazem Hassanein explains that sovereign sukuk are a financial instrument widely used in many<\/span> countries<\/span><\/a>, especially in Southeast Asia and the Gulf, and are distinguished by their ability to provide good returns for investors, but they differ from the idea of selling assets directly.<\/span><\/p>\n

He explains that the distinction must be made between ordinary assets, which can be invested for a specific period of time and then recovered, and strategic or vital assets, which represent basic pillars of the national economy, pointing out that the essential question is whether sukuk are being used as a genuine investment mechanism or as an indirect means of disposing of public assets.<\/span><\/p>\n

Hassanein believes that resorting to selling assets or using sukuk proceeds to repay debts raises questions about the economic role of public assets, noting that borrowing is supposed to be directed to productive projects capable of generating future returns that help service the debt, rather than relying on disposing of assets to repay existing financial obligations.<\/span><\/p>\n

He adds that the<\/span> Ras<\/span><\/a> El-Hekma deal represented a financial success in terms of the volume of resources obtained, but in his view it raises economic questions about the loss of<\/span> assets<\/span><\/a> of strategic value and the possibility of repeating this approach with other assets in the future.<\/span> <\/span><\/p>\n

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Budget-sector debt stocks<\/figcaption>
<\/div>
<\/div>
Fiscal year<\/th>Total debt<\/th>Domestic debt<\/th>External debt<\/th><\/tr><\/thead>
2020\/2021<\/td>5.9<\/bdi><\/td>4.6<\/bdi><\/td>1.3<\/bdi><\/td><\/tr>
2021\/2022<\/td>6.9<\/bdi><\/td>5.4<\/bdi><\/td>1.5<\/bdi><\/td><\/tr>
2022\/2023<\/td>9.7<\/bdi><\/td>7.1<\/bdi><\/td>2.5<\/bdi><\/td><\/tr>
2023\/2024<\/td>12.5<\/bdi><\/td>8.7<\/bdi><\/td>3.8<\/bdi><\/td><\/tr>
2024\/2025<\/td>15.0<\/bdi><\/td>11.1<\/bdi><\/td>3.9<\/bdi><\/td><\/tr><\/tbody><\/table><\/div>
Ministry of Finance, 2026\/2027 budget<\/span>