CAIRO: The Egyptian government's plan to settle public companies' debt to the banking system will be completed by the end of the fiscal year, the investment minister said earlier this week. In Sunday's Parliamentary session, Investment Minister Mahmoud Mohieldin said the debt settlement program has been successful, according to a statement on the ministry's website. In March, Moheildin had pledged that before the end of fiscal year 2009/10, “no penny would be owed by any public company, whether profit-making or loss-making.” Egypt's fiscal year ends June 30. In July 2004, within the framework of the state's Asset Management Program, the Ministry of Investment launched a comprehensive program to restructure public companies under its supervision. Its main goal was to settle the notorious non-performing loans of public companies, which amounted to LE 32.5 billion in June 2004. According to a ministry statement, the debt settlement was part and parcel of a more vigorous reform program for the overall banking sector that began with the cabinet appointed in 2004. Had the debts not been settled, their total would have swelled to LE 50 billion by the end of June, due to accumulating interest. Omneia Helmy, deputy executive director of the Egyptian Center for Economic Studies, saw this as a good step towards restructuring the companies. “If they succeed in paying back the debt, it will allow the Ministry of Investment to go forward with plans for the companies, whether it is to privatize or partially privatize some public sector firms through distributing free shares to citizens.” The ministry said that adjusting the financial positions of holding companies and their affiliates resulted in a surplus in annual accrued interest on 97 companies affiliated to seven holding companies. Abdel-Fatah El-Gebali, deputy manager of Al-Ahram Center for Political and Strategic Studies, said this positive for both the companies and banks. “Debtor companies can focus less on interest payments, acquire lower priced loans and invest in their growth and progress, much needed funds are given back to the public banks,” said El-Gebali. According to the statement, there have been successive rises in the net profits of public companies, reaching LE 3.892 billion in the fiscal year ending June 2009. This is an increase from LE 91 million in 2004, LE 1.677 billion in 2006, LE 3.903 billion in 2007 and LE 5.165 billion in 2008. This ministry said this helped companies pay the Ministry of Finance's profit portion, which totaled LE 4.443 billion from 2004 to 2009 Also, public companies' net equity went from a negative value of LE 2.224 billion in 2004 to a positive value of LE 5.258 billion in 2009. The improving performance of the public sector companies also affected labor and wages in the sector. According to the statement, liquidity and operational situations at companies have been enhanced, which helped them appoint 72,561 new workers in public sector companies between 2005 and 2009. Another 33,723 casual workers were made full-time employees. The statement said that companies raised wages from LE 4.8 billion in June 2003 to LE 7.4 billion in 2009. The ministry said that improving companies' financing capabilities has fueled a plan to inject LE 6 billion in investments during fiscal year 2009/10.
