Dubai, United Arab Emirates (CNN) – Egypt paid $52 billion in debt and debt installments over the past two fiscal years, including $25.5 billion during the first six months of this year, according to press statements by Finance Minister Mohamed Maait.
Egypt is preparing to pay international obligations valued at $15.1 billion before the end of this year, according to Central Bank data. At the same time, Moeid said that the government intends to borrow by issuing Chinese Panda and Japanese Samurai bonds worth $500 million each.
Economists confirmed Egypt’s ability to fulfill its international obligations without faltering in light of the improvement in the state’s dollar revenues and the diversification of partnerships with international and regional partners.
Banking expert Mohamed Badra said that Egypt has not defaulted throughout its history in repaying any debts or their installments, as a result of diversifying its sources of income from foreign exchange, stressing his confidence in Egypt’s continued ability to fulfill its international obligations during the coming period in light of the improvement in sources of income from the Suez Canal and tourism. In addition to enhancing efforts to convert part of the debts into investments within a debt swap program.
Egypt is linked to debt swap programs with Germany and Italy, and the former agreed last June to exempt Egypt from paying debts worth 54 million euros in exchange for financing the construction of a project to connect two wind farms with a capacity of 500 megawatts each to the electricity transmission network.
Badra added, in special statements to CNN Arabic, that the Central Bank succeeded in rebuilding foreign exchange reserves to a large extent by gradually increasing them slightly during the past 12 months, to secure liquidity to pay international obligations during the coming period, without any default occurring. Debts.
Egypt’s foreign exchange reserves lost $7.8 billion during the period from February to July of 2022, following the outbreak of the Russian-Ukrainian war, as a result of the exit of indirect foreign investments after the wave of increasing interest rates globally, after which the reserve increased by $1.8 billion within a year to reach 34.88 billion dollars. One billion dollars, according to data from the Central Bank of Egypt.
The head of the Plan and Budget Committee in the Egyptian House of Representatives, Fakhri Al-Feki, said that Egypt faced a foreign exchange shortage crisis as a result of several factors, most notably the exit of indirect foreign investments after the increase in interest rates globally, and the rise in the import bill as a result of the supply chain crisis due to the Corona pandemic and the Russian-Ukrainian war, which It led to an increase in the prices of electronic chips and thus an increase in the prices of cars and electronic devices. The prices of basic goods also increased as a result of the war.
The annual inflation rate in Egyptian cities rose to 37.4% in August, and the general urban consumer price index increased by 1.6% compared to 0.9% in the same month of the previous year, according to data from the Central Agency for Public Mobilization and Statistics.
Al-Fiqi added, in exclusive statements to CNN Arabic, that the lack of dollar liquidity led to a reduction in the exchange rate of the pound against the dollar by more than 50%, with the dollar recording near the level of 31 pounds, which was reflected in the rise in inflation prices to record levels, which was also affected by the increase in basic commodity prices. Globally, which prompted the central bank to increase interest rates by 11% since March of last year to curb inflation.
The exchange rate of the dollar against the pound rose from the level of 15.5 pounds in March 2022 to 30.82 pounds for purchases at the Central Bank of Egypt, as a result of the lack of Egypt’s foreign exchange resources affected by the exit of indirect foreign investments after raising interest rates globally, and the rise in the import bill for basic goods after the outbreak of war. Russian Ukrainian.
Al-Feki stated that the Central Bank of Egypt is currently working on 3 files in parallel, which is first to rebuild the country’s cash reserves after the exit of indirect foreign investments, second to meet the cost of the high import bill, which amounts to $8 billion per month, and third to pay Egypt’s international debt obligations. Debt installments average $2 billion per month, by increasing foreign exchange sources by increasing revenues from tourism, the Suez Canal, Egyptian exports, and direct foreign investments, and stimulating an increase in remittances from Egyptians abroad, with the aim of building a reserve sufficient at the present time to cover the country’s needs for 3 months.
The Suez Canal achieved the highest revenue in its history, recording $9.4 billion during the last fiscal year 2022/2023, an unprecedented increase of 35% over the previous fiscal year.
Al-Fiqi said that in addition to enhancing its dollar revenues, Egypt obtained financing from international financial institutions, most notably obtaining a loan from the World Bank worth $7 billion, and another loan from the International Monetary Fund worth $3 billion, in addition to financing from its international and regional partners in the form of Gulf deposits, and selling… Government assets with a total value of $5.2 billion, and there is another package of assets that will be sold during the coming period to raise $5 billion, in addition to issuing bonds in international markets such as samurai and panda bonds.
At the end of last August, the Council of Ministers approved the Ministry of Finance to implement a new issuance of “Samurai Bonds,” worth $500 million, in Japanese yen, for a period of five years, within the framework of achieving the goals of diversifying international markets, currencies, and investors. To finance the general budget and extend the average life of the debt, according to a press release.
Al-Feki said that Egypt succeeded in paying international obligations worth $96 billion during the years from July 2016 until September 2022, which confirms Egypt’s commitment to fulfilling its debt pledges and installments on the specified dates, but completing this commitment requires quickly attracting foreign investments. Direct, pointing out the facilities approved by the government during the last period, including legislation, decisions, and financing to encourage an increase in productive sectors, in addition to the approval of the International Monetary Fund to complete its loan to Egypt, after the review committee meeting scheduled during the coming days to disburse the second and third tranches.
In October last year, the International Monetary Fund agreed to lend Egypt $3 billion, disbursed the first tranche in December worth $347 million, and postponed the disbursement of the second and third tranches after implementing the agreed-upon reform program, which includes complete liberalization. exchange rate, and the sale of government assets.
2023-09-10 18:50:34
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