Egypt is set to obtain $400 million in budget assistance from the United Kingdom (UK). This comes after receiving a substantial influx of approximately $57 billion in funding from different allies and development partners.
This information was revealed during an interview featuring Rania Al-Mashat, the Egyptian International Cooperation Minister. It was highlighted that the specified sum will be granted in addition to the previously declared $6 billion budgetary funding from the World Bank.
Al-Mashat emphasized that Egypt’s objective is to obtain the initial payments of $200 million from the United Kingdom and $500 million from the World Bank by July 2024, with identical amounts anticipated in 2025.
Al-Mashat who was attending the spring meetings of the International Monetary Fund and World Bank noted, “Once Egypt’s parliament approves this financing, Egypt can get it,”
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This contribution is a significant part of Egypt’s efforts to secure a total of $57 billion in funding from various global institutions and regional allies, aimed at bolstering the country’s economy.
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The new $400 million commitment to Egypt indicates continued foreign engagement with the country, even after securing over $57 billion in funding from global institutions and regional allies.
Egypt is currently facing one of its worst economic crises in history, as the country has devalued its currency by over 40% in 2024, as well as a staggering inflation rate of 33.7% as of March 2024.
Out of the $57 billion, $35 billion is being contributed by the UAE, with a focus on transforming a coastal area of Egypt into a global tourism destination.
After signing the UAE deal, the Egyptian government was able to implement a long-awaited currency flotation subsequently paving the way for extensive new agreements with the IMF, European Union, and the World Bank.
Also, the Ministry of International Cooperation has been in contact with the Asian Infrastructure Investment Bank to explore potential support for the budget, with negotiations expected to commence soon.
Minister Al-Mashat also highlighted a debt swap agreement worth $100 million signed with China in October 2023.
Furthermore, Al-Mashat also said that Egypt had anticipated a commitment of $7.8 billion from the European Union, clarifying that $5 billion of this sum was designated for budgetary assistance.
It is worth mentioning that back in March, Ursula von der Leyen, the President of the European Commission, headed a delegation to Egypt and unveiled a funding package comprising approximately €7.4 billion in loans and grants.
In addition to this, the World Bank has recently declared a financial aid package of $6 billion for Egypt over three years, with $3 billion specifically allocated to private sector projects through the International Finance Corporation.
Egypt Doles Out $1.5bn, Begins Repaying Debt Owed To Foreign Oil And Gas Companies
A couple of weeks ago, Egypt initiated the repayment of its debts to foreign oil and gas companies that are operating within the country. The government allocated a total of $1.5bn specifically for these payments.
According to Reuters, a cabinet statement revealed that the payment which just resumed, accounts for 20% of the arrears owed to companies. it stated that the rest of the arrears would be paid off through a scheduled plan.
Egypt started accumulating arrears to companies and contractors during a long period of foreign currency shortage.
The menacing shortage has eased lately after Egypt announced a record deal with UAE, devalued its currency, and also got aid and expanded its program with the IMF.
A source close to the companies told Reuters that Egypt has informed one of the companies that it would start paying back up to $1.5bn of the total arrears as soon as it can.
Another industry source stated that Egypt has set aside $1.5bn for the payments and the idea was to pay all companies at least 20% of what they are being owed.
Egypt’s Serious Foreign currency scarcity peaked in 2022 leading to various restrictions on imports and government payments.
The situation eased after Egypt signed a record deal with UAE sovereign fund ADQ for the development of prime land at Ras El Hekma on the Mediterranean coast. Egypt said it has received $10bn of new funds out of the $24bn from the deal.
Egypt also signed various deals and aid packages including an expanded $8bn financial package with the IMF and additional funding from the World Bank and European Union.
All these new funds facilitated an end to Egypt’s foreign exchange scarcity making it possible for them to clear their arrears.
