Blitz Bureau
NEW DELHI: Egypt and the International Islamic Trade Finance Corporation signed a $1.5 billion loan agreement on May 13 to support food and energy security in the North African country..
Under the agreement, the funding would be allocated between the General Authority for Supply Commodities (GASC), which will receive $700 million, and the Egyptian General Petroleum Corporation, which will receive $800 million, Planning Minister Ahmed Rostom said. Since 2008, the ITFC has approved over $24 billion in funding for Egypt to finance the energy sector, contribute to food security, and support small and medium-sized enterprises, ITFC CEO Adib Youssef al Aama said during the signing ceremony.
This includes $8.8 billion in funding to GASC to support Egypt’s imports of food commodities, most notably about 12.6 million tons of wheat. The ITFC also supported Egypt with foreign oil companies’ arrears that the government has pledged to completely pay off by the end of June.
Egypt has a long-standing bread subsidy scheme that costs upwards of $2.6 billion annually and is relied upon by an estimated 70 million citizens, making the country one of the world’s largest importers of wheat.
Cash transfers Last week, the Government announced it may end its current subsidies programme and replace it with cash transfers starting from July. The loan comes as Egypt’s economy absorbs the shockwaves of the US-Israeli war on Iran, piling fresh pressure on a country still navigating a fragile reform path under its $8 billion IMF programme.
The war has cast an immediate shadow over Egypt’s precarious economic stability, which remains heavily reliant on hot money inflows as a source of financing and gas imports as a key source of energy.
