Suez Canal Fund.. Fears of “selling the assets of the Egyptian state” despite assurances
Despite official assurances, the Egyptian parliament’s approval of the launch of a “fund belonging to the Suez Canal Authority” has caused consternation in Egypt and sparked controversy between supporters who see this as “a new step on the road to investment” and opponents who refer to “the government’s new selling trend state property.” Egyptian”.
At a session on Monday, the Egyptian parliament approved all articles of the draft law submitted by the government, which amends some provisions of Law no. 30 from 1975, which regulates the Suez Canal Authority.
The draft law aims to “establish a fund owned by the Suez Canal Authority”, through which it seeks to increase its ability to contribute to the sustainable economic development of the facilities of that authority.
The aim of the fund is to help the Suez Canal Authority to face crises and emergency situations that arise as a result of exceptional circumstances, force majeure or bad economic conditions.
It also aims to enable the Suez Canal Authority to carry out all economic and investment activities, including the Fund’s contribution, alone or with others, to establishing companies, increasing their capital and investing in securities, according to the “Masrawy” website.
The amendments allow the fund to “buy, sell, rent, lease, exploit and benefit from fixed and movable assets.”
The session of the Egyptian parliament witnessed a debate among the representatives about the “members of the law”, between supporters and opponents.
For his part, the speaker of the Egyptian parliament, Hanafi Jabali, confirmed that the draft law submitted by the government “does not include any provisions affecting the canal or its sale”, noting at the same time that the state is obliged to protect, develop and preserve it as an international waterway.
During the plenary session on Tuesday, Jabali said that “selling, renting or investing in the Canal Fund corresponds to the nature of the funds and does not affect the canal itself in any way, and that the Suez Canal is public money that cannot be ignored.”
He emphasized that “the Egyptian parliament is doing its best to review the laws for the protection of the country and citizens, especially the Suez Canal Fund.”
However, some MPs, including Member of Parliament Abdel Moneim Imam, have announced their rejection of the draft law on in-principle changes to the “Suez Canal Management” law.
During Monday’s session, the deputy said: “We are talking about 120,000 Egyptians who gave their lives to dig the Suez Canal, and we are talking about the biggest source of foreign exchange, $7 billion in the national budget, and it already has a deficit of £560 billion.”
And he continued: “How can I get to the establishment of a fund that takes a percentage of these revenues to put it in a fund? This is not enough, we have 7,000 private funds in Egypt (..)”.
The controversy moved to social networks, where activists considered the changes to the law to be an “overture to the sale of state assets.”
A member of the Presidential Board of Pardons in Egypt, lawyer Tariq Al-Awadi, said in a post on his Facebook profile, “State assets belong to past generations, the present generation and future generations,” adding that “the current generation has no (right) to dispose of them.”
Others believed that the fund aimed to use the resources of the Suez Canal and organize a new phase of investment in the country, refusing to talk about the “sale of state assets”.
Sale of state assets or investments?
Egyptian writer and political analyst, Magdi Hamdan, believes that the amended articles of the law contain many “manipulations and loose and vague phrases” that can establish “the sale of state assets or the leasing of the Suez Canal navigation corridor.”
Speaking to the Al-Hurra website, he believes the establishment of the new fund sets up a new phase of “selling the assets of the Egyptian state”, saying: “The sale of the Suez Canal is completely similar to the sale of the pyramids, which is something that everyone in Egypt rejects.”
Hamdan says, “There is a plan by the government to lease the Suez Canal or sell its assets, and there are directives to cover up the matter and not reveal its circumstances or details,” he said.
On the other hand, Walid Gaballah, a member of the Egyptian Society for Economics, Statistics and Legislation, confirms that the new fund was added “to the investment branches of the Egyptian state in light of the Egyptian tendency to increase the contribution of the private sector to the development process.”
In his interview with the website Al-Hurra, he points out that there is “ambiguity and confusion” between the Suez Canal as an authority and its “fund”, which the amendments state “has the right to rent and sell its property, not the property of the authority .”
Gaballah says: “The new fund does not control the assets of the Suez Canal, but it does control the assets that will be annexed to it,” he said.
What is the income of the International Monetary Fund?
In his speech, Magdy Hamdan linked the changes to the law to the International Monetary Fund’s approval to grant Egypt a financial aid package of $3 billion over a period of 46 months, citing “a passage from the fund’s statement.”
On Friday, the Executive Board of the Fund announced the approval of a 46-month agreement with Egypt under the “Extended Fund Facility” worth 2,350.17 million units of special drawing rights, which corresponds to 115.4 percent of the membership quota in the Fund. , or about 3 billion dollars, it is stated in the press release. Statement of the International Monetary Fund.
The fund said it expects the EFF to trigger the availability of approximately $14 billion in additional financing for Egypt from its international and regional partners, including new financing from GCC countries and other partners through “ongoing sales of state-owned assets and financing channels.” traditional bilateral and multilateral creditors.
Gulf countries have deposited at least $13 billion with the Central Bank of Egypt since the start of this year to support Egypt’s economy, bringing total Gulf deposits to $28 billion, according to Reuters.
Hamdan refers to the “sale of state-owned assets” clause, linking parliament’s approval of amendments to the Suez Canal Authority law to the direction the fund revealed, he said.
But Jaballah condemned the link and said the IMF statement “determines the reality and does not create a new thing”, describing the link as “uncontrollable”.
“For years, the Egyptian state has been withdrawing from some sectors, to be replaced by the private sector, a trend that Egypt was gradually adopting before the Corona pandemic came to slow those steps,” Gaballah said.
According to him, the launch of the new fund comes in the context of “the exit of the state from numerous sectors that will be replaced by private sectors”, with the aim of directing investors after criticism of the state for “interfering in economic activities.”
He says: “It has nothing to do with the order to sell state assets, nor with the agreement with the International Monetary Fund.”
In Egypt, according to official data, the poverty rate is 30 percent of the total population of about 104 million people, “Agence France Presse” reports.
Egyptians are going through a difficult economic situation in light of the high cost of living, and the Egyptian pound has lost more than half its value against the US dollar since the beginning of this year, after Egypt’s central bank recently decided to adopt a flexible exchange rate.
Therefore, Hamdan condemns the idea of creating a “new fund” in light of the existence of more than 7,000 private funds that no one knows anything about, which contain billions of pounds, are not included in the state budget and have no oversight. over them, he said.
Hamdan says: “Each party in the country currently owns a special fund, and there is no country in the world that has this amount or number of funds,” given that “there is a lot of mistrust and suspicion about the new fund.”
In 2021, the newspaper “Sedmi dan” states that the number of registered private insurance funds amounted to 764 funds, of which workers’ funds reached 694, with 70 funds in liquidation, but there are no “official final statistics”. for the number of real private funds.”
Gaballah points out that “all funds in Egypt are subject to the supervision of the Central Audit Agency, and a percentage of their profits and earnings are included in the general state budget.”
The success of the new fund depends on “selecting appropriate assets and managing them in an appropriate manner to increase Suez Canal revenues without affecting the waterway or the state’s revenues in this regard,” Jaballah said in a statement.
In remarks on Monday, Osama Rabie, head of Egypt’s Suez Canal Authority, expected revenues from the canal to reach $8 billion in the current fiscal year, which runs from July 1 to June 30, according to Reuters.
However, Hamdan points out that there is a real popular fear of “giving up or leasing the Suez Canal Corridor” and says: “What is happening is a very dangerous thing that harms future generations, and the Egyptian government or authorities have no right to dispose of this national asset.”
According to him, “Egyptian authorities are paving the way for other steps of selling, concessioning and leasing new assets to the state,” considering it “a new policy of the Egyptian government after the difficult economic situation.”
Egypt is one of the five countries in the world that are threatened with the inability to pay their external debt in the amount of more than 150 billion dollars, according to Moody’s, as reported by the France Presse agency.
Last August, Goldman Sachs said Egypt needed about $15 billion to pay off its debts.