Egypt borrows $2bn ‘to finance state budget’

Egypt has signed its first $2 billion conventional and Islamic financing loan to support the local economy, the Egyptian Ministry of Finance announced yesterday.

In an official statement, the ministry said that the loan aimed at “financing the state’s general budget and supporting the Egyptian economy, to contribute to maintain its strong path in the face of prevailing fluctuations in global markets.”

The ministry said that the facility was raised to $1.5 billion to $2 billion due to an “increased demand for subscription.”

“Despite the difficult challenges that the market faced due to the repercussions of the ongoing coronavirus crisis, there was a great turnout, and the subscription coverage rate reached 1.75 times the value of the offering, so the Ministry of Finance increased the volume of financing from $1.5 billion to $2 billion, as shown,” the statement read.

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The loan, which was recently approved by the Egyptian parliament, is being offered by Emirates NBD Capital Limited – the investment banking arm of Emirates NBD – and the First Abu Dhabi Bank (FAB).

Finance Minister, Mohamed Ma’it, said that his country was “working to diversify its sources of financing, by making use of regional and Islamic sources of financing.”

Egypt’s need for foreign exchange increased during the current year due to the negative economic and financial repercussions of the coronavirus pandemics. The International Monetary Fund (IMF) said recently that Egypt’s external debt reached $119.6 billion at the end of the last financial year.

The Central Bank of Egypt announced that the country’s domestic debt had hit 4.18 trillion Egyptian pounds ($269.6 billion) at the end September 2019.