Dr. Mostafa Madbouly, Prime Minister, confirmed that Egypt seeks to save $25 billion from the annual import bill, by identifying investment opportunities in the industrial sector, localizing these opportunities, and operating troubled factories.
Dr. Mostafa Madbouly said, according to what was announced by the Cabinet on Tuesday evening, following a press conference by the Prime Minister, in response to a question about industry and the plan to operate troubled factories in the coming years, that industry is at the top of the government’s priorities, especially the issue of troubled factories.
Dr. Mostafa Madbouly added that the government had previously studied this issue in great detail, and found that the struggling factories were divided into two groups: the first group were some factories that had not conducted proper feasibility studies from the beginning, and had started implementing the project and were surprised by very large losses, which has nothing to do with the economic crisis. The second group were factories that were operating well, but the successive economic crises led to their failure, and this second group is the one that the government aims to help return to work again by providing incentives.
He explained that the problem with the second type is that it defaulted due to its borrowing from banks for industrial purposes, and after the economic crisis it became a defaulting customer with the banks, so the government intervenes with easy financing at reduced interest rates to enable it to return and continue production.
He pointed out that an initiative was made for the state to bear a large part of the interest for industrial facilities, and this type of factories would benefit from it in particular.
Dr. Mostafa Madbouly said: The most important thing is the factories that we aim to establish in Egypt, explaining that 152 investment opportunities have been identified in the industrial sector, and if we are able to localize these opportunities and start production, in a way that meets the needs of the local market, this will save the state $25 billion from the annual import bill.
He stressed that this is what the government is working on and what it wants to focus on during the next three years, which will increase production and achieve foreign currency savings.
- Oil companies dues
In response to a question about the dues of foreign oil companies operating in Egypt, Dr. Mostafa Madbouly said: “The government has paid between 20 and 25% of the value of the dues of these companies.”
He stressed that the new Minister of Petroleum and Mineral Resources was tasked with meeting with all companies and developing a plan to reschedule all arrears, which is what actually happened over the past two days.
He explained that the Minister has already held meetings with the heads of companies and foreign partners in Egypt to develop this plan, and it will be presented to the Prime Minister, stressing that there is already a trend to pay the upcoming dues while scheduling the arrears at the same time.
Dr. Mostafa Madbouly added that Egypt also went through this situation in 2016, during which the arrears reached 6 billion dollars, and it took four years to pay until 2020.
He stressed that there is credibility among companies that the state is paying their dues, explaining that he asked the minister to complete the required plan to schedule the arrears, within the first month after his assignment, and that we will adhere to it after discussing it during the coming period.
- Electricity price hike
Regarding the government’s intention to raise electricity and fuel prices before the end of this year, Dr. Mostafa Madbouly explained that the state has no way, on its way to reforming the economic and financial system, other than gradually moving the prices of some services, and a plan will be put in place in this regard, noting that the most important thing at the present time is to solve the existing electricity problem, and some other services that citizens complain about.
“He said: “He had previously announced that the government would move quietly and gradually over the course of a year and a half, and at specific times, to raise these prices, in order to bridge the large gap that currently exists. He explained in this regard that the cost of a litre of diesel that the state bears today represents 20 pounds, while it is sold for only 10 pounds. Therefore, it is necessary to move quietly so that the state can achieve balance and provide the amount of support that it can afford, and this is what the state intends to do in the coming period, but the most important thing is to solve the problems that currently plague the citizen, foremost of which is the electricity problem.”
“I made this clear with complete transparency, as the state will not bear the hundreds of billions of support it has borne over the course of a year and a half, to ease the burdens on the citizen, and in the hope that the crises that have become more complicated will end,” he added, noting that the general budget has incurred several burdens, so today we need, gradually, and over a not-so-short period of time, to try to compensate for part of the large support currently in place, until it becomes of a reasonable value for the state.