September 19, 2018 / 4:08 PM / 3 months ago

UPDATE 2-Egypt "resilient" to emerging market turbulence - minister

(Recasts, adds planned bond sales, quotes)

By Aidan Lewis and Patrick Werr

CAIRO, Sept 19 (Reuters) - Egypt’s economy is proving “resilient” in the face of emerging market turbulence and there are additional sources of funding to draw on if needed, the finance minister said on Wednesday.

The government will seek around $5 billion in foreign currency bonds in the coming months, the minister, Mohamed Maait, said as well as billions of dollars of budget support already committed by the IMF and other international lenders.

Emerging markets generally have been shaken by an escalating trade war between the United States and China, as well as interest rate increases by the Federal Reserve which are attracting funds back to the United States.

The turmoil is seen as one factor rattling Egypt’s stock market, which plunged 3.6 percent on Wednesday, its lowest close this year, as liquidity tightened.

Maait acknowledged that Egypt faced steep debt repayments and that higher oil prices and a slight drop in the value of the Egyptian pound could “disturb” Egypt’s goal of reducing its budget deficit to 8.4 percent in the year to June 2019, from 9.8 percent last year.

But he said the economy, boosted by a recovery of the tourism industry and implementation of an IMF-backed reform programme since late 2016, had been able to withstand external pressures.

“Until now our economy is able to deal with the consequences of this negative effect,” Maait said.

“I believe that our economy is resilient, I believe that our economy is well diversified ... We hope that in the coming few months we see a different environment.”

Egypt this week cancelled a third successive treasury bond auction as foreign investors cut their exposure to its debt.

Maait said the country could currently depend on planned budget support from international lenders, and “if we can’t, we will take (treasury sales) with a higher cost”.

The government will return to the international bond market “at the appropriate time”, he said, possibly in January-March 2019.

Egypt is expecting a surge in public and private share offerings in the coming months that will test investor appetite.

Maait said shares in two state companies would be offered in October, two in November, with a fifth share offer in December.

The government will weigh up in January how to proceed with further state company sales.

“The five companies we decided to work on, we decided to see how it would go,” Maait said, adding that Egypt would then see whether it would give up majority stakes in some of the companies and whether it would sell to strategic investors.

Egypt hopes the privatisation drive will spur investment and private-sector growth, which has been moribund since an uprising in 2011 that has rocked the economy.

Editing by Richard Balmforth

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