Egypt, one of the world’s largest wheat importers, has given notice it will withdraw at the end of June from a decades-old UN grains treaty, causing consternation among some other signatories to the convention, Reuters reports.
Egypt’s departure from the multinational Grains Trade Convention (GTC), which promotes market transparency to further trade cooperation, follows a period of turmoil in grains markets linked to the war in Ukraine and concerns about global food security.
Egypt signed the GTC, the only international treaty covering trade in grains, at its inception in 1995, and has been a member of the Council that governs it since 1949. In February, it submitted a request to withdraw with effect from 30 June, 2023.
“This came without prior information. Several delegations within the IGC are surprised and sad about the decision,” Arnaud Petit, Executive Director of the International Grains Council, which administers the treaty, told Reuters.
Several members would ask Egypt to reconsider its decision, he added.
Egypt’s Foreign Ministry told Reuters in a statement that the decision was made after an assessment by the ministries of supply and trade concluded Egypt’s membership in the Council delivered “no added value”.
Other signatories to the GTC include major grain importers and exporters such as the United States and the European Union.
Two sources familiar with the matter, who asked to remain anonymous, told Reuters that Egypt owed the IGC membership fees. The Foreign Ministry did not respond to a question about fees.
Traders told Reuters they did not expect an impact on the grains market, but one diplomatic source said that, symbolically, Egypt’s departure from a multinational organisation could be seen as concerning.
Despite those efforts, Egypt relied on competitive Russia imports to boost its reserves through traditional tenders, some funded by the World Bank, as well as non-traditional direct offers.
The economic impact of the war also exacerbated a foreign currency shortage in Egypt, leading to a slowdown in imports, a backlog of goods in ports and a $3 billion financial support package from the IMF.
In January, Egypt’s government instructed ministries to curb non-essential spending until the end of the fiscal year.