Egypt’s parliament passes $11 billion sovereign wealth fund

Egypt floated its pound currency in November 2016 under a three-year $12 billion IMF program tied to ambitious economic reforms. (AFP)
Updated 17 July 2018
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Egypt’s parliament passes $11 billion sovereign wealth fund

  • The fund will be eligible to participate in all economic and investment activities, including setting up companies and investing in financial instruments
  • Egypt floated its pound currency in November 2016 under a three-year $12 billion IMF program tied to ambitious economic reforms

CAIRO: Egypt is setting up a sovereign wealth fund with a capital of 200 billion Egyptian pounds ($11 billion), the state news agency said on Tuesday.
Former Public Enterprise Minister Khaled Badawi said in March that Egypt was discussing setting up a sovereign wealth fund to manage state companies it plans to list on the stock exchange.
The agency, MENA, did not specifically mention the privatization program, but said: “The fund aims to contribute to sustainable economic development through management of its funds and assets.”
The fund will be eligible to participate in all economic and investment activities, including setting up companies, investing in financial instruments, and other debt instruments in Egypt and abroad, the statement said.
The law, passed by parliament on Monday, approved a 5 billion Egyptian pound start-up capital for the fund called “Egypt Fund,” with 1 billion pounds to be transferred immediately from the treasury, MENA said.
Al-Borsa, a local financial newspaper, quoted Amr El-Gohary, a member of the parliament’s economic committee, as saying that the balance from the start-up capital will be paid over three years as part of the government investment plans.
MENA said the law allowed the president to transfer ownership of any unutilized state assets to the fund or any of its subsidiaries.
It gave no details of when it the fund was envisaged to reach 200 billion Egyptian pounds.
Egypt’s parliament last year passed a long-delayed investment law to streamline doing business in Egypt and to create incentives it hopes will bring back investors’ dollars after years of turmoil.
Egypt floated its pound currency in November 2016 under a three-year $12 billion IMF program tied to ambitious economic reforms, part of a bid to restore capital flows that dried up after its 2011 uprising drove away investors and tourists.


‘Huge increase’ in crude prices not expected: IEA executive director

Updated 19 July 2019
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‘Huge increase’ in crude prices not expected: IEA executive director

  • The International Energy Agency is revising its 2019 global oil demand growth forecast down to 1.1 million barrels per day
  • IEA’s Fatih Birol: Serious political tensions could impact market dynamics

NEW DELHI: The International Energy Agency (IEA) doesn’t expect oil prices to rise significantly because demand is slowing and there is a glut in global crude markets, its executive director said on Friday.
“Prices are determined by the markets ... If we see the market today, we see that the demand is slowing down considerably,” said IEA’s Fatih Birol, in public comments made during a two-day energy conference in New Delhi.
The IEA is revising its 2019 global oil demand growth forecast down to 1.1 million barrels per day (bpd) and may cut it again if the global economy and especially China shows further weakness, Birol told Reuters in an interview on Thursday.
Last year, the IEA predicted that 2019 oil demand would grow by 1.5 million bpd. But in June this year it cut the growth forecast to 1.2 million bpd.
“Substantial amount of oil is coming from the United States, about 1.8 million barrels per day, plus oil from Iraq, Brazil and Libya,” Birol said.
Under normal circumstances, he said, he doesn’t expect a “huge increase” in crude oil prices. But Birol warned serious political tensions could yet impact market dynamics.
Crude oil prices rose nearly 2 percent on Friday after a US Navy ship destroyed an Iranian drone in the Strait of Hormuz, a major chokepoint for global crude flows.
Referring to India, Birol stressed the country could cut its imports, amid rising oil demand in the country, by increasing domestic local oil and gas production.
Prime Minister Narendra Modi had set a target in 2015 to cut India’s dependence on oil imports to two-thirds of consumption by 2022, and half by 2030. But rising demand and low domestic production have pushed imports to 84 percent of total needs in the last five years, government data shows.
Meanwhile, the IEA doesn’t expect a global push toward environmentally friendly electric vehicles can dent crude demand significantly, Birol said, as the main driver of crude demand globally has been petrochemicals, not cars.
He said the impact of a serious electric vehicle adoption push by the Indian government would not be felt immediately.