● Obtaining development financing requires many procedures and is subject to strict governance rules.
● 1.6% average interest rate on development financing during the period 2020 - 2023.
● Repayment periods exceeding 18 years and 6 years grace periods
● The annual withdrawal rate from the current development cooperation portfolio amounts to $4.1 billion.
The Ministry of International Cooperation revealed, in its annual report, that the total soft development financing packages and grants obtained by various sectors of the state and the private sector during the past four years amounted to about $38.8 billion, from multilateral and bilateral development partners. This impressive figure speaks volumes about the Ministry's effectiveness in securing vital funding for national development initiatives.
Where were those funds directed?
Soft development financing was directed to the government and private sectors, amounting to $28.5 billion to various state sectors, and $10.3 billion to the private sector. These funds are distributed in various development fields, most notably agriculture, supply and irrigation, electricity and renewable energy, social housing, drinking water and sanitation networks, women’s empowerment and social protection programmes, education, technical education and higher education, small and medium enterprises, environment, governance, health and local development, trade and industry, in addition to budget support programs for some sectors. These funds enhance the state’s priorities to implement its development vision in light of the United Nations SDGs.
Who are the most prominent development partners?
The Arab Republic of Egypt has close relations with various development partners, and agreements for these financings have been concluded with various multilateral and bilateral partners, including the World Bank Group, the European Bank for Reconstruction and Development, the Asian Infrastructure Investment Bank, the European Investment Bank, and the African Development Bank. As well as the United States of America, France, Germany, Japan, China, South Korea, the European Union, the United Nations and its affiliated agencies and programs, the International Islamic Trade Finance Corporation, the Islamic Development Bank, and other partners.
What are the interest rates and repayment terms for these financing?
Concessional development financing is the least expensive type of international financing in terms of interest because it is linked to development projects that are implemented in agreed-upon stages and according to feasibility studies. Therefore, these financings always witness great demand from various developing countries and emerging economies, and the interest in these financings is very concessional to stimulate countries to implement the Sustainable Development Goals. During the past four years, the average interest rate on financing was 1.6%, the average repayment period was 18.6 years, and the average grace period for each financing was 6.4 years.
Does signing these agreements mean that these amounts have been fully obtained?
The soft development financing agreements that were signed for the benefit of the government sector amounted to 28.5 billion dollars, and this does not mean that these amounts have been obtained, as many procedures are completed for each financing separately, starting with withdrawal and implementation, and after completing the procedures, the financing enters the portfolio. The Ministry of International Cooperation’s current funds, which include projects already being implemented, are withdrawn according to the agreed-upon project implementation stages. Therefore, all development funding is withdrawn in tranches linked to the project’s timetable.
The average annual withdrawal rate from the current development financing portfolio is $4.1 billion.
What is the percentage of these financing from external debt?
The Ministry of International Cooperation's current development financing portfolio constitutes 16% of Egypt's external debt.
How are these funds obtained?
The process of obtaining development financing to implement a specific project is subject to a precise process of governance established by the Egyptian state in order to achieve maximum benefit from these funds. Before obtaining financing, the concerned authority studies the matter through the External Debt Management Committee from various aspects, and after the approval of the committee, it studies applications. The financing provided, identifying the appropriate development partner, negotiating the most appropriate financing terms, taking into account the degree of sectoral focus, providing the required technical support and grants, and ensuring integration with existing projects, then moving forward with the necessary legislative and constitutional procedures before the agreements are completed and entered into force.
Is cooperation with development partners limited to obtaining funds?
Cooperation with multilateral and bilateral development partners is not limited only to obtaining development funds, but also takes advantage of the technical expertise and consultations available to the partners in implementing projects. Therefore, the financing of each project includes grants for technical support and consultations.
For more details about the annual report of the Ministry of International Cooperation