Egypt has primary budget surplus for first time in 15 years

A man carries breads along a busy street past a banner for Egyptian President Abdel Fattah El-Sisi in Cairo. (Reuters)
Updated 05 July 2018
0

Egypt has primary budget surplus for first time in 15 years

  • Pledges to pay oil company debts
  • Foreign reserves on the rise

CAIRO: Egypt announced on Thursday it had a primary budget surplus for the first time in 15 years and said it was committed to paying oil companies’ debts by end of 2019 as it seeks to lure investors to revive a crisis-hit economy.

Cairo has enacted a raft of tough austerity measures backed by the International Monetary Fund (IMF) since 2016, hoping for a strong financial comeback as it recovers from years of political upheaval.

President Abdel Fattah El-Sisi’s government devalued the Egyptian pound by half in 2016, and has pushed through steep fuel and electricity subsidy cuts this year, in measures praised by some economists but lamented by many Egyptians who say they are struggling with soaring living costs.

Finance Minister Mohamed Maait said Egypt achieved a 0.2 percent primary budget surplus, worth 4 million Egyptian pounds ($223 million) in its 2017-2018 fiscal year. It is aiming for a 2 percent primary surplus in the current fiscal year.

Egypt’s fiscal year runs from July to June.

Primary budget figures do not factor in interest payments on government debt.

The country expected its 2017-2018 budget deficit to stand at 9.8 percent, slightly above the 9.1 percent it said last year it was targeting.

Maait told reporters that revenues expected from the 2018-2019 budget were around 989 billion Egyptian pounds ($55 billion), 817 billion of which would be spent on debts and interest.

Foreign reserves rose by the end of June to $44.258 billion from $44.139 billion, the central bank announced separately, continuing their climb since Egypt secured the $12 billion IMF loan.

Egypt wants to woo foreign investors and increase other crucial sources of income such as tourism, which declined drastically in recent years because of political unrest and a precarious security situation, although tourism revenues have recently picked up.

The discovery of large amounts of offshore gas in Egyptian waters, including the giant Zohr gas field, has caused hope for another source of revenue with Egypt as a potential gas hub for the region.

Petroleum Minister Tarek El Molla told reporters on Thursday Egypt was committed to paying off its debts to foreign oil companies by the end of 2019.


SoftBank mobile unit to go for $21bn IPO

Updated 13 November 2018
0

SoftBank mobile unit to go for $21bn IPO

  • The IPO will be one of the biggest ever worldwide, and will provide the group with funds to pay down debt and continue placing big bets on innovations
  • SoftBank’s bets so far have been as varied as small gaming startups, ride-hailing firms such as Uber Technologies, and e-commerce behemoth Alibaba Group Holding

TOKYO: SoftBank Group Corp. has won approval to conduct a 2.4 trillion yen ($21.04 billion) initial public offering (IPO) of its domestic telecoms business, in a deal that will seal the group’s transformation into a top global technology investor.
The IPO will be one of the biggest ever worldwide, and will provide the group with funds to pay down debt and continue placing big bets on innovations that CEO Masayoshi Son predicts will drive future tech trends.
SoftBank’s bets so far have been as varied as small gaming startups, ride-hailing firms such as Uber Technologies, and e-commerce behemoth Alibaba Group Holding.
SoftBank Group aims to raise 2.4 trillion yen through the sale of 1.6 billion SoftBank Corp. shares at an tentative price of 1,500 yen each, a filing with the Ministry of Finance showed on Monday.

 

 The amount could rise by 240.6 billion yen if demand triggers an overallotment, taking the total closer to the $25 billion that Alibaba raised in 2014 in the biggest-ever IPO.
The final IPO price will be determined on Dec. 10, and SoftBank Corp. will list on the Tokyo Stock Exchange on Dec. 19 with an initial market value of 7.18 trillion yen — about 1 trillion yen above that of rival KDDI Corp, which has about 10 million more subscribers.
The parent will retain a stake of around two-thirds, depending on the overallotment.
The mammoth offering comes at a time when investors have begun questioning the outlook for Japan’s telecoms companies.
The IPO was initially expected to appeal to investors seeking stability, but the government has recently called on carriers to lower fees while backing more wireless competition, sending shockwaves through the industry.
Yet SoftBank’s brand is still likely to draw retail investors long accustomed to using SoftBank’s phone and Internet services. Many still see CEO Son as a tech visionary who brought Apple’s iPhone to Japan.
Japanese households are commonly seen as an attractive target in IPOs with their 1,829 trillion yen in financial assets, even if they are traditionally risk-averse with over 50 percent of assets in cash and deposits. More than 80 percent of the shares will be offered to domestic retail investors, a person with knowledge of the matter told Reuters.
“I think a reasonable amount of money will be attracted to this one,” said Tetsutaro Abe, an equity research analyst at Aizawa Securities. “It’s a mobile company, so the cash flow is steady.”

FACTOID

SoftBank to sell 1.6 billion shares at a tentative price of 1,500 yen ($13) each.