Egypt will likely renew its deal with a global banking consortium for another year to strengthen its foreign reserves and to permit the government to implement economic reforms, the Minister of Finance, Amr El Garhy, told Al Ahram.
“I think so. I think the central bank will renew it. It is a joint decision between the central bank and [the ministry],” El-Garhy said.
Under the original agreement, the banks provided $2 billion in loans to Egypt with a one-year maturity. The loans were backed by international bonds issued by the ministry and offered on the Irish stock exchange, Al Ahram previously reported.
The amount of financing provided by any future agreement will depend “on the amount of the haircut, or discount, El Garhy said, adding that “I think it [the discount] will be improved. Last year it was 30 percent. I think this will improve this year and the discount could be only 25 percent, and that reflects improvement in the risk profile of Egypt.”
The finance ministry offered $4 billion in bonds on the Irish exchange to finance the loan: $1.360 billion with a 4.62% interest rate and a maturity date in December 2017; $1.320 billion with a 6.75% interest rate and a maturity date in November 2024; and a $1.320 billion with a 7% interest rate and a maturity date of November 2028, according to the Middle East Eye.
The loan agreement with the banking consortium was finalized the day before the IMF met to consider a $12 billion stabilization loan to the country, the Middle East Eye reported.