The Central Bank of Egypt (CBE) yesterday announced the postponement of the repayment of three Saudi deposits worth $6.6 billion for an additional year.
Al-Araby Al-Jadeed quoted CBE in a statement as saying that the first deposit was worth $2.6 billion, adding that its repayment was postponed in return for paying a three per cent interest.
“The postponement decision, which was reached in consultation with the Saudi government, comes within the framework of strengthening Egypt’s foreign exchange reserves,” the bank pointed out.
Egypt received the Saudi deposit in 2013 and agreed to repay it in five years. The Saudi move was reported to have been made in an attempt from Riyadh to support the 2013 military coup against the Muslim Brotherhood-affiliated first freely-elected president, Mohamed Morsi.
The Egyptian-Saudi talks, CBE added, had resulted in a maturity extension for the second interest-free five-year $2 billion deposit – received in July 2013 – for an additional year in return for paying a three per cent interest.
The bank noted that the maturity of the third $2 billion deposit – received in April 2015 with a 2.5 per cent fixed interest – had been extended for an additional year with no extra interest.
From May 2012 up until mid-2017, Egypt received a total of five deposits from Saudi Arabia worth $8 billion, of which it had repaid $600 million so far. Egypt is due to repay some $5.2 billion of the Saudi deposits by the second half of 2019.
Moreover, Egypt has received five other deposits from the United Arab Emirates (UAE) worth $6 billion due in instalments up to the end of 2023, in addition to another $4 billion Kuwaiti deposits due in instalments until mid-2020.
Last year, Cairo said that Saudi Arabia, UAE and Kuwait had agreed to extend their deposits’ maturities.
CBE’s governor, Tarek Amer, recently said that the bank’s policy was “to provide long-term funds and to support the country’s foreign reserve balance through borrowing, for the bank to control the Egyptian pound’s exchange rate during the violent fluctuations.”
Egypt has been negotiating billions of dollars in aid from various lenders to help revive an economy battered by political upheaval since the 2011 revolution and to ease a dollar shortage that has crippled import activity and hampered recovery.
In November 2015, Egypt won a three-year $12 billion International Monetary Fund (IMF) loan, which aimed at reviving the country’s struggling economy, bringing down public debt and controlling inflation while seeking to protect the poor.
The country’s cash reserves fell by about $2 billion in December, as a result of the repayment of CBE’s treasury bills and foreign debt obligations.
In June 2018, Egypt’s foreign debt rose by 17.2 per cent year-on-year, hitting $92.6 billion compared to $79 billion during the same period in 2017.