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IDB approves $425 mn loan to Egypt

Loans will help fund development of petroleum refinery and first phase of redevelopment work at Sharm El-Sheikh airport

Waad Ahmed , Monday 8 Sep 2014
Islamic Development Bank
Islamic Development Bank (Photo: Al-Ahram)
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The Islamic Development Bank (IDB) has revealed the repayment schedule for two loans to Egypt worth $425 million.

The loans are to be repaid at 1.05 percent above Libor in installments every six months after the completion of the project,  Aboubakr Barry, the bank's director of finance, told Ahram Online on Monday.

The agreement is an ijarah contract that gives the bank a title to the property financed for 15 years after which the projects backing the loan would revert back to the government, added Barry.

The loans target the development of a petroleum refinery ($198 million) and the first phase in the development of Sharm El-Sheikh international airport ($226.8 million).

Finance Minister Hany Qadry said in a statement released Thursday that the ministry was guaranteeing the loan.

The government is seeking external debt to avoid crowding the private sector in domestic financial resources, added Qadry.

Cooperation between the IDB and Egypt is expected to prosper as the government takes up several development projects, said Qadry.

Egypt’s government has already requested two more loans from the IDB to finance the second phase of the Sharm El-Sheikh development project and linking of the electricity grid with Saudi Arabia at a cost of $223.2 million and $160 million respectively.

The bank’s current portfolio in Egypt is $2.5 billion while its total contributions in Egypt, since its establishment in the 1970s, amount to $10.5 billion.

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