Economy

New oil and finance ministers in Egyptian cabinet reshuffle

July 4, 2024, 6:49 AM

President Abdel Fattah El Sisi poses for a group photo with Egypt's new cabinet

New cabinet sworn in this week
Ahmed Kouchouk is finance minister
Karim Badawi heads petroleum

The Egyptian government has conducted a long-awaited cabinet reshuffle resulting in a series of new appointees to important ministries including foreign affairs, finance and petroleum.

A handful of existing ministers expanded their portfolios.

Abdel Fattah El Sisi, the Egyptian president, swore in the new cabinet, which will be led by the incumbent prime minister Mostafa Madbouly, on Wednesday.

Among the new appointees is Ahmed Kouchouk who takes over as finance minister from Mohamed Maait.

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Karim Badawi, a managing director at SLB, formerly Schlumberger, the US oilfield services company, takes over as minister of petroleum and mineral resources from Tarek El Molla.

Analysts said that the new team, around two-thirds of which is changed from the previous cabinet, could help attract foreign investment as the government embarks on a new financial year.

Monica Malik, chief economist at Abu Dhabi Commercial Bank, described the new cabinet appointees as “people with technocratic experience and a strong connection to investors”.

Kouchouk previously served as deputy finance minister to Maait, who was appointed in 2018 and oversaw negotiations with the International Monetary Fund that led to the agreement of an $8 billion extended fund facility in March.

Kouchouk is familiar to many of Egypt’s interlocutors. As vice minister for fiscal policies since 2016, he has been closely involved in IMF negotiations and has often been the public face of the ministry, particularly at investment conferences.

More so than his predecessor, Kouchouk was “the one that markets knew”, according to Charlie Robertson, head of macrostrategy at FIM Partners.

“The cabinet reshuffle is about showing their commitment to reform,” Robertson said. “Promoting trusted people like Kochouk to the ministry is part of that.”

Egyptian sovereign bonds and non-deliverable forwards for the Egyptian pound rallied following news of the reshuffle and Kouchouk’s appointment. Karim Henide, a portfolio manager based in London, said the rallies were due to a relative increase of bond prices compared to recent fluctuations and Kouchouk’s “recognition on the global stage” as somebody who “speaks the same language as investors”.

Kouchouk, a former senior economist at the World Bank, also sits on the board of directors at the Asian Infrastructure Investment Bank. He has frequently voiced support for implementing IMF recommended reforms, supporting the private sector, and diversifying Egypt’s sovereign debt.

Since 2020, Egypt has issued the Middle East’s first sovereign green bonds, as well as the country’s first samurai bonds, first panda bonds, and first shariah-compliant sukuks. Speaking at a EuroMoney event in Cairo in 2022, Kouchouk said that “one of the big pillars [in the finance ministry’s debt strategy] is diversification”, something he said “we have been working very hard over the last few years to implement”.

He faces a number of immediate challenges as finance minister in a country still suffering from double-digit inflation, a debt-to-GDP ratio over 90 percent, and pressure to follow through on various IMF-advised reforms including sales of government assets and a reduction of state subsidies.

“They’ve got through the crisis,” said Robertson. “They now need to deliver on some of the tougher stuff.”

Speaking to state news broadcaster Extra News on Wednesday, Kouchouk said he was “very optimistic as we have a great opportunity, with the formation of the new cabinet” to build on recent “large deals, large investments, and a desire to invest in Egypt”.

The country signed its largest ever investment deal earlier this year when the Abu Dhabi sovereign wealth fund ADQ paid $35 billion in cash and debt relief to develop the north coast peninsula of Ras al Hekma.

Other substantial development deals are reportedly in the works, including a rumoured Saudi or Qatari scheme to develop Ras Gamila on the Red Sea coast and plans announced by Talaat Moustafa Group on Tuesday to invest $21 billion developing its own north coast tourism project SouthMed.

Kouchouk said that his ministry will be “looking at how we can attract more private investment and create a strong economic plan for the upcoming period”.

The reshuffle, which began at the start of June with the dissolving of the previous cabinet, saw 20 new faces appointed to government ministries, in the first new cabinet since Sisi began his third term as president.

Two new deputy prime ministers were assigned to serve under Madbouly: Kamel Wazir, the transport minister and a close confidant of President Sisi, and Khaled Abdel Ghaffar, the health minister. Both men retain their current ministerial roles.

Egypt is in the grips of an energy crisis, with gas shortages causing daily power cuts across the country. The new minister for electricity and renewable energy is Mahmoud Esmat, who was the previous public enterprise minister.

The incumbent minister for international cooperation, Rania Mashat, has seen her role expanded to include that of the minister of planning and economic development, previously held by Hala el Said.

According to Malik, “bringing in foreign investment to support growth, to create jobs, all of this is going to be very important,” given the budgetary restraints of the upcoming period and pressure on the government to cut back on large state-led projects.