Egypt seeks raising $2.5 bln. amid its worsening economic situation

Egypt is considering raising $2.5 billion soon as the country’s economic pressures are escalating, states a report by Bloomberg.

Besides corruption and dire economic policy, a drop in tourists and high oil prices have hit Egypt hard. Furthermore, the Russian-Ukrainian conflict has put further pressures on the country’s local currency.

“Egypt is considering raising a loan of about $2.5 billion, according to people with knowledge of the plans, as economic pressure in the North African nation intensifies,” stated Asharq Business, citing a recent report published by Bloomberg.

Therefore, the government is conducting talks with regional and international banks about the details of the financing, sources, asking not to be identified because the talks are private, said, adding that the discussions are preliminary and may not result in a deal, the sources said. 

However, the Egyptian government officials said they had no information on the issue.

“Urgency is building for Egypt’s $400 billion economy to secure more foreign currency as it seeks to plug gaping deficits,” the report stated.

Soaring oil and commodity prices have hit one of the world’s largest wheat importers hard, as has the loss of tourists from Russia and Ukraine.

Also, the Russian-Ukrainian conflict has put pressure on Egypt’s currency and prompted it to seek International Monetary Fund assistance.  

As the cascade of side effects spread, Egypt is seeking to garner $41 billion to pay for its current account deficit and maturing debt by end of 2023. 

Financing from the Gulf is providing a crucial backstop to Egypt as it looks stabilize finances.

Saudi Arabia, the United Arab Emirates and Qatar have pledged more than $22 billion in deposits and investments in the struggling economy. 

Earlier this week, a unit of Saudi Arabia’s sovereign wealth fund scooped up state-owned stakes in four Egyptian publicly listed companies for $1.3 billion, as part of the kingdom’s commitment to channel resources.

First Abu Dhabi Bank PJSC and Abu Dhabi Commercial Bank PJSC are leading the loan and have invited other banks to participate, the people said.

The borrowing is expected to be priced at around 400 basis points over the three-month secured overnight financing rate, according to two of the people.  

However, representatives for FAB and ADCB declined to comment on this, stated Bloomberg. 

Egypt has expanded its borrowing in recent years in order to finance its general budget and some infrastructure projects.

However, it is currently suffering from the high prices of basic commodities and the repercussions of the Ukraine war, pushing it to resort to the IMF again for financial support.