Egypt has secured $2 billion in a syndicated loan from a consortium of regional banks as the country seeks to bridge its budget deficit and address external debt for the fiscal year.
The deal, closed by Emirates NBD and Standard Chartered, drew an "overwhelming" response from the market and was more than 2.5 times oversubscribed, according to a statement on Friday. Lenders that participated included Emirates Islamic Bank, Abu Dhabi Islamic Bank and National Bank of Kuwait.
The proceeds will be used primarily to finance Egypt's budgetary requirements and "support the country in safeguarding its strong economic path in the prevailing volatile global markets", the statement said. It will also help the country maintain a decreasing debt trajectory as the loan follows the full settlement of its $3 billion syndicated loan in November.
The $2 billion syndicated loan "underscores Egypt’s resilience and the confidence of our economic reforms", said Ahmed Kouchouk, Egypt's Minister of Finance. "Egypt continues to diversify its funding sources by leveraging regional financing opportunities, within a disciplined fiscal plan to maintain economic stability, as well as fiscal and debt sustainability."
The strong interest from regional and international banks in the syndicated loan "highlights Egypt’s strong position among emerging markets and the increasing confidence of cross-border investors in its economic outlook", said Hitesh Asarpota, chief executive of Emirates NBD Capital.
The deal comes after the International Monetary Fund reached an agreement with Egypt last month, allowing the country to access about $1.2 billion as part of an $8 billion loan programme. In the same month the Arab nation also received $1 billion in macroeconomic assistance from the European Commission under their continuing strategic partnership.
However, with loan repayments amounting to more than $60 billion for the 2024/2025 fiscal year, according to Egypt’s Central Bank, the country’s financing needs far outweigh the amount it has received.
For the current fiscal year, which began in July, Egypt paid $14.7 billion in the first quarter and approximately $7 billion in November and December, Prime Minister Mostafa Madbouly said last month. Its largest quarterly repayment of $20.59 billion is due in the third quarter, which began this month.
Mr Madbouly said the debt due in the coming year will be lower than the amount repaid in 2024, which amounted to about $38.7 billion.
Egypt, which borders Gaza, has been grappling with geopolitical instability in the region and revenue from the Suez Canal has slumped because of Houthi attacks in the Red Sea. Its economy has faced several challenges in recent years, including high debt levels, inflation and a foreign exchange shortage.
The IMF deal, which came less than a month after a UAE consortium bought 130 million square metres of Egypt’s Mediterranean coast for $35 billion, came with stringent economic reforms including a free float of the Egyptian pound, and significant reductions on food and energy subsidies.
Last month, the fund said the country's economic reform priorities include boosting domestic revenue, improving the business environment, accelerating divestment and levelling the playing field while "enhancing governance and transparency".
