Egypt to apply for another $1bn loan

The Egyptian government has approved in principle the plan to apply for a loan worth $1 billion from the International Islamic Trade Finance Corporation (ITFC) for the benefit of the General Petroleum Authority.

The government said in a statement that the funds will be used to purchase the urgent petroleum products needs for the domestic market.

The loan from ITFC, a member of the Islamic Development Bank group, will be based on the Sharia-compliant Murabaha system, with low interest and a long repayment period.

In July 2012, Egypt signed an agreement with the Islamic Development Bank to obtain $1 billion to fund urgent market purchases of petroleum products, with a 3.25 per cent interest rate, to be repaid over 10 years.

Since its launch in 2008, ITFC has provided loans worth more than $1.7 billion for state-owned and private Egyptian firms in vital sectors such as petroleum, gas and food, according to data by the ministry of international cooperation.

Egypt’s Minister of Planning Ashraf El-Araby said on Saturday that the country would raise fuel and electricity prices “as soon as possible” as part of a new scheme to reduce the budget deficit in line with the new budget approved by President Abdel Fatah Al-Sisi.

“With the new fiscal year, there will be a number of procedures to confront the deficit decisively. There will be rises in electricity prices for those who consume more, and the price of petroleum products will change. The entire price liberation scheme will be implemented within 3-5 years,” El-Araby said in a press conference.