Egypt: Has India provided a credit line to Egypt?

According to Bloomberg, Egypt said that “India is providing credit line to boost its economy”. However, soon after, Reuters reported that the Egyptian Supply Minister denied that a credit line had been opened with India.

India is providing Egypt with a credit line of unspecified value, Egyptian Supply Minister Ali El-Mosilhy said, in the latest support from an ally for the North African nation’s troubled economy. The minister, speaking to Bloomberg News, didn’t give further details on the facility.

The Middle East’s most populous nation is racing to turn around an economy that was heavily exposed to the shock waves of Russia’s invasion of Ukraine and is a major importer of wheat and other commodities.

Egypt has agreed on a $3 billion deal with the International Monetary Fund, while its Gulf Arab allies have pledged billions of dollars in investment.

Such credit lines are typically used to import key commodities, including food. The facility could ease pressures on the economy, just as signs of progress in Egypt’s plan to sell state assets and a tourism rebound lead Citigroup Inc. to predict authorities will hold off a devaluation of the currency until at least September.

India and Egypt have built ever-closer ties in recent years, with Egyptian President Abdel-Fattah El-Sisi a special guest at India’s Republic Day parade in January. Prime Minister Narendra Modi will likely visit Egypt later in June, the Press Trust of India reported this week.

Minister denies

According to Reuters, Egyptian Supply Minister Ali Moselhy said lster on Monday that no credit line had been opened with India, but discussions were ongoing regarding payments for imports using currencies other than the dollar.

Bloomberg News, citing Moselhy, had earlier reported that India was providing Egypt with a credit line worth an unspecified value. The news agency said that the minister did not give further details on the facility.

“Nothing of the sort has been implemented, but there are discussions so that we can trade in local currencies of countries like India, Russia, or China,” the minister told Reuters.

Moselhy said that similar discussions were also being held with Russia and China.

The Indian finance ministry did not immediately respond to a Reuters request for comment.

Indian Prime Minister Narendra Modi is set to visit Egypt later this month, as the two countries seek to become strategic partners, according to media reports.

Egypt is trying to stabilize its economy after the Russian invasion of Ukraine last year rocked its tourism industry, raised commodity prices,and prompted foreign investors to pull about $20 billion out of its financial markets.

Inflation has risen sharply over the last year in Egypt after a series of currency devaluations, a prolonged shortage of foreign currency, and continuing delays in getting imports into the country.

The supply minister told Reuters in May the country’s state grains buyer had deferred opening letters of credit to pay for wheat imports to alleviate financial pressures caused by a foreign currency shortage.

The country has plans of selling state assets to meet its debt repayment commitments.