Urgent| Egypt is negotiating with China and Japan to obtain new loans | Economie

Urgent| Egypt is negotiating with China and Japan to obtain new loans | Economie
Urgent| Egypt is negotiating with China and Japan to obtain new loans | Economie

Dr. Mohamed Maait, Minister of Finance, said that Egypt hopes to be able to reach an agreement on IMF assistance within one to two months, adding that the country is studying financing options that include affordable loans from China and Japan.

Maait told Bloomberg that the size of the new IMF program has not yet been determined; Because it is usually determined at the last stage of negotiations, noting that reaching an agreement with the International Monetary Fund is a message of reassurance and confidence to international markets.

Goldman Sachs Group and Bank of America have estimated that Egypt may need to secure a $15 billion package from the International Monetary Fund, although Maait had previously said it was seeking a smaller amount.

Analysts said the aid could range between $3 billion and $5 billion, as the new agreement with the International Monetary Fund is a priority for the government, which spends nearly half of its revenue on interest payments.

The Minister of Finance revealed that since March 2022, Egypt has seen $22 billion in outflows from the domestic debt market and has not had any significant inflows.

Egypt’s plans to solve its financial crisis

The minister pointed out that the government is now working on attracting more foreign direct investment, boosting exports, increasing the number of initial public offerings, and offering stakes for sale in some assets to bring in foreign currencies.

He explained that Egypt, which is seeking to diversify its sources of financing, has held discussions with some governments, led by Japan and China, regarding obtaining loans at a reasonable cost, noting that officials are looking at a package of alternatives to try to obtain low-cost financing.

Japan loan

Maait continued his speech, that talks with Japan are underway regarding a loan of up to $500 million that will be directed towards various areas, including environmentally friendly projects, and the government is working to obtain financing from international and regional multilateral development institutions and banks.

Opening new markets

The government is seeking to enter into new markets, after Egypt became the first country in the Middle East to sell sovereign green bonds. The Ministry of Finance may issue $500 million in what will be the first panda bonds in the Chinese market and offer another $500 million of green debt, in addition to borrowing up to two billion dollars through the country’s first sukuk, or Islamic bonds, according to Maait.

International Monetary Fund

Egypt’s immediate focus at the moment is on talks with the IMF. Egypt provided the IMF with updated data on fiscal and monetary policies after the end of the last fiscal year, and the appointment of a new central bank governor in August.

The Minister of Finance explained that the International Monetary Fund is currently working with the authorities on the external financing gap in the country, and that the International Monetary Fund supports the government’s social programs, praising Egypt’s fiscal approach as well as its track record of reforms, and that it is negotiating with the authorities on a flexible exchange rate policy.

The minister stressed that Egypt is aware of a possible plan by the International Monetary Fund to provide emergency financing to countries facing food price shocks.

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