State-ownership policy: Sweet talking the IMF into privatization mirage
In April 2022, President Abdel Fattah El-Sisi sprang a surprise at the “Egyptian Family” iftar, a state-sponsored Ramadan gathering: a new privatization program to raise $40 billion over four years. For the first time, the program would include selling stakes in military-owned companies: a step that had been off the table for decades.
Today, four years after that speech, with the long IMF agreement approaching its final review, it has become clear that the privatization pledge was largely just a speech. One that the Egyptian regime crafted with considerable skill and designed to buy as much time as possible until the loan expired.
Who inspired the president’s ideas?
This wasn’t the republic’s first attempt at privatization (the policy dates to the 1990s) but this may be its worst iteration yet. The president offered no justification for the sales beyond raising cash, whereas earlier programs had at least claimed to be shedding loss-making firms or developing existing ones.
And that enormous figure, like so many announced numbers, was never explained: was it a fair price for the companies the president had in mind, or a lowball?
Perhaps the only bright spot in the announcement was the mention of army-owned firms. For all its flaws, privatization would finally crack open that black box and possibly reveal a sliver of data on the scale of its economic activity.
A lot of water has passed under the bridge since, and the picture now looks entirely different. The president’s enthusiasm, zeal even, for privatization has evaporated. The same fatigue seems to have spread to the IMF, judging by the text of the penultimate review of its current agreement with Egypt.
We can make sense of this shift through the lens of political economy: a privatization decision isn’t merely an asset sale, but a change in the power relations behind it. The push to sell appears to have run into fierce internal resistance over the past few years, and the bureaucracy has succeeded in drowning “the Fund” in a sea of quicksand called “procedure.”
It may help to first understand the context behind the president’s enthusiastic remarks on privatization: they weren’t his own brainchild, but most likely an echo of the IMF’s guidance at the time.
The IMF had laid out this vision in the second review report of its previous agreement with Egypt, issued in mid-2021, calling for a radical shift in Egypt’s privatization history and floating, perhaps for the first time, the idea of the state exiting entire economic sectors altogether. At the time, the IMF linked what it called “developing an ownership policy” to “strengthening accountability and transparency.”
A few months later, the Cabinet spoke in the IMF’s own idiom, issuing a statement claiming that a study, which no one has seen to this day, produced by the Cabinet’s Information and Decision Support Center had proposed a number of mechanisms to empower the private sector.
That study bore the clear imprint of one idea: defining the limits of the state’s economic activity. It split economic sectors into those the state would keep, those it would exit entirely, and those it would exit gradually, alongside efforts to reform active state-owned companies.
Why did the government’s talk of privatization take on the IMF’s tone back then? The secret is in the financing. Just days before the president’s announcement of the 40 billion, Egypt had submitted a formal request to the IMF for a new loan. The president, then, wasn’t speaking to us. He was pledging to the Fund that Egypt would adopt its economic ideology in exchange for fresh money.
The army’s red line
Today, privatization has gradually lost its shine in the IMF’s documents, fading to a flicker on the verge of going out entirely. The fifth and sixth reviews, issued last February under the current financing agreement, may have been the Fund’s last serious attempt to impose an ambitious privatization plan on the government. They set clear commitments to complete four privatization deals between last December and the end of the program this coming December, followed by eleven more, including five military-owned companies.
The Fund’s sharp tone criticizing the armed forces for crowding out the private sector faded, then vanished entirely from the seventh review
But by the seventh review, at the end of last July, the IMF’s voice had grown hoarse, and despair had taken hold. It settled for privatization covering a modest share of this year’s external financing gap, around $400 million, and spoke gingerly of prospects for listing state companies on the stock exchange.
More importantly, it leveled no criticism at the military economy this time, despite the expanding role of the Future of Egypt Authority, the clearest embodiment of the armed forces’ grip on the economy. It went nowhere near the military’s economic activity or its crowding out of the private sector, unlike the fourth review (November 2024), which had addressed both directly.
According to the seventh review, total privatization proceeds under the current financing program will amount to roughly $7.2 billion, a figure below the $8.7 billion projected at the program’s start, and worlds away from the president’s $40 billion.
And about half of that came from a single land sale in the Alamein area, not from selling off productive state or quasi-state enterprises that were crowding out the private sector, which was the Fund’s real concern.
Buying time as statecraft
The weak privatization haul doesn’t mean the IMF has nothing to talk about. Quite the opposite: the government has buried it under a mountain of procedures, which have become the international institution’s last hope for showing the world it achieved some measure of success in Egypt, enough to save face.
The seventh review report cites the government’s pledge to “expand coverage and improve data quality” for 230 state-owned companies, including military firms and others transferred to the sovereign fund’s jurisdiction, before the loan ends in November 2026.
This is a cheap bureaucratic maneuver, meant to let the government claim some achievement in the months between the seventh review, announced at the end of July, and the final review in December.
Tellingly, the body responsible for inventorying and evaluating state institutions, the State-Owned Enterprises Unit, was itself created to buy time. This unit was established under State Ownership Policy Law No. 170 of 2025, and it remains unclear how its mandate differs from the remit of the Ministry of Public Business Sector. Yet the move has been presented as a milestone on the road to privatization.
Military-owned companies were never entered into the database of the ministerial unit responsible for the privatization and state-divestment program
Suppose, for argument’s sake, that this unit was set up to manage state assets more broadly than just the companies covered by the Public Business Sector Law. The law governing it still contains a clause exempting a wide range of companies from its authority: it excuses the unit from responsibility for “companies pursuing purposes of national or strategic significance,” a loophole wide enough to shield plenty of firms from privatization’s scalpel, chief among them, of course, those belonging to the armed forces.
The law stipulates that determining which companies fall under the unit’s authority requires a Cabinet decision “based on a joint proposal from the relevant minister and the competent authority of the owning entity,” safeguards that, as is plain enough, only widen the loophole through which the armed forces’ interests slip through the privatization dragnet unscathed.
If this analysis of a loophole tailor-made to shield the army and its companies isn’t convincing enough, the matter is no longer left to analysis: the seventh review report cites the state-ownership unit’s own admission that the data it currently holds on state-owned companies is limited to those governed by the Public Business Sector Law.
Military companies, then, never fell under the unit’s authority, and without even needing a Cabinet decision exempting them on national-security grounds. They were excluded regardless of their line of business, even if that business happened to be farming, freezing, and packaging shrimp.
Impressive maneuvering, all told. It has carried the government almost to the final leg of its agreement with the IMF without ever having to test the armed forces on the one thing they hold dearest: their economic activity.