● Dr. Rania A. Al-Mashat: The MoU for debt swaps with China enhances the diversification of financing mechanisms through innovative tools in line with calls for developing the global financial structure.
● Debt swap programs have contributed to strengthening food security efforts and contributing to the development of education and investment in human capital.
● During 2023, letters exchanged with the Italian side were signed to extend the work of the third tranche of the debt swap program.
● $116 million from Germany as part of the debt swap program for the energy pillar with the “NWFE” program.
During the visit of H.E. Dr. Mostafa Madbouly, the Prime Minister of Egypt, to China to participate in the Belt and Road Forum for International Cooperation, Egypt and China signed a memorandum of understanding (MoU) in debt swaps for development. The memorandum of understanding was signed by H.E. Dr. Rania A. Al-Mashat, Minister of International Cooperation, and Mr. Luo Zhaohui, Chairman of the China International Development Cooperation Agency (CIDCA), with the aim of exploring new horizons and areas of cooperation, to enhance the comprehensive strategic partnership between the two countries.
In the following report, the Ministry of International Cooperation reviews the debt swap programs for development implemented with Germany and Italy, which have been implemented since 2001. The Ministry of International Cooperation has implemented the two programs worth about $730 million, through which many projects have already been implemented, and many follow in the pipeline; totalling to about 120 projects.
Commenting on the new agreement with China, Al-Mashat said that the signing of an MoU for debt swap between Egypt and China reflects the strength of the joint relations between the two countries, which are linked by long-standing historical ties and friendship. This was especially enhanced under the leadership of H.E. President Abdel Fattah El-Sisi, the President of the Arab Republic of Egypt, to achieve joint development and benefit from the Chinese experience in development. H.E. explained that Egypt has accumulated expertise and distinguished experience since the beginning of the 2000s in debt swaps with the German and Italian sides, and that the agreement with China comes in light of the diversification of financing mechanisms through innovative tools in line with calls for developing the global financial architecture.
Debt Swap Program for Development with Italy
Over the past twenty years, the Government of Egypt has succeeded in implementing a debt swap program with the Italian government, to support the implementation of about 100 projects aimed at achieving sustainable development in Egypt in line with national goals and priorities.
The first phase of the debt swap agreement for development was signed in 2001, and was used to implement more than 54 projects in various development fields, including rural development projects in western Nubariya, projects in the field of green transformation, and projects to enhance the productive cycle of agricultural crops. This is in addition to rehabilitating water supply systems in the Beheira Governorate.
The second phase of the debt swap agreement was signed with Italy in 2007, during which 32 projects were implemented, the most important of which were projects in addressing poverty, creating job opportunities, solid waste management, establishing a wastewater treatment plant in Rubiki, modernizing secondary industrial schools, and establishing education and tech complexes in Fayoum.
In 2012, the third phase was signed, and within that framework, a number of projects were implemented and others are in the pipeline in food security and agriculture, higher education, civil society, environment and preservation of cultural heritage, economically empowering women, establishing 10 wheat storage silos, and projects to support youth.
During the current year, Al-Mashat signed letters exchanged with the Italian Ambassador to Cairo, Michele Quaroni, to extend the agreement for the third phase of the debt swap program for development, until December 2024, for the completion of all projects.
The aim of extending the third phase of the agreement is to implement a number of projects, including the project “Establishing Field silos and an Information Technology System for Wheat Management” at a value of EGP 416.7 million, and the second phase of the “Development of Fish Farming in Egypt” project at a value of EGP 138.9 million, and in the environment sector, financing the third phase of the “Solid Waste Management in Minya Governorate” project, worth EGP 70.5 million.
Debt Swap Program with Germany
During the G8 summit in Deauville in May 2011, Germany approved a debt swap agreement with Egypt, to implement development projects in Egypt aimed at enhancing job creation, the competitiveness of the private sector, energy, water efficiency, management and technical education. In light of this partnership, the following was implemented:
The first phase of the program was made available in 2012, and through it, many projects were implemented: school feeding for the benefit of the Ministry of Education and Technical Education in cooperation with the World Food Programme (WFP); the program to support the quality of education “first phase” for the Ministry of Education and Technical Education; the hydropower station rehabilitation project for the Ministry of Electricity and Renewable Energy; the project to reduce environmental pollution from thermal generation plants “Third Phase” for the Ministry of Electricity and Renewable Energy, contribution to the Assiut Barrage Project and power generation stations for the benefit of the Ministries of Electricity and Renewable Energy and Water Resources and Irrigation; and a project to improve drinking water and sanitation “phase two” for the Ministry of Housing, Utilities and Urban Communities.
In 2019 and 2022, the second phase was agreed on and support was allocated to projects that support quality education “second phase” for the Ministry of Education and Technical Education, and the project for investing in human capital in rural areas in Upper Egypt for the WFP in cooperation with the Ministry of Education. Education and Technical Education, and the program for improving drinking water and sanitation services “first phase” for the Ministry of Housing, Utilities and Urban Communities, and financial support for the Comprehensive Technical Education Initiative in Egypt: for the Ministry of Education and Technical Education.
During 2022 and 2023, the third phase was made available, a segment of which was for the “School Nutrition to Combat Dropout and Child Labor” project for the the Ministry of Education and Technical Education in cooperation with the WFP.
Last June, after the Government of Egypt announced the update of the Nationally Determined Contributions (NDCs), coordination was made with the German side and the financing agreement for the electricity transmission project was signed at a value of €54 million, representing the second tranche of the third phase of the program, for the electricity transmission project, with the aim of supporting increased use of renewable energy sources, reducing greenhouse gas emissions, and accelerating progress towards the green transition, under the umbrella of the Nexus of Water, Food and Energy (NWFE Program). Discussions are also currently underway regarding a new tranche within the framework of implementing the NWFE program, worth €50 million, so that the development financing available for the energy pillar of the program through debt swap with Germany will amount to about €104 million, equivalent to $116 million.