The Central Bank of Egypt (CBE) said on Tuesday it has paid the government’s financial obligation to Italian energy company Eni for the development of the giant Zohr gas field discovered off the Mediterranean coast in 2015.
In statements to state news agency MENA, CBE Assistant Subgovernor Rami Aboul Naga said the bank paid $630 million in January to Eni.
In late January, Petroleum Minister Tarek El Molla told Reuters that Egypt is committed to repaying the $3.5 billion it owes in arrears to foreign oil companies but that a foreign currency shortage has made the drawing down of those debts more difficult.
Zohr, discovered by Eni in August 2015, is the largest gas field in the Mediterranean, estimated to contain 850 billion cubic metres of gas.
Aboul Naga said the bank also paid a January installment to the Paris Club, and fulfilled other international commitments related to the country’s foreign debt.
The Paris Club is an informal group comprised of officials from 20 creditor countries that works, in cooperation with the International Monetary Fund, to find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries.
Egypt’s external debt stood at $60 billion by the end of the first quarter of the current fiscal year 2016/17, up from $55.7 billion in FY 2015/2016.
Aboul Naga added that the CBE was able to ensure that foreign currency would cover the $819 million needed by the Egyptian General Petroleum Corporation and the General Authority For Supply Commodities, as well as the $430 million needed by government bodies and different ministries in January.
The announcement follows statements by the bank earlier Wednesday saying that Egypt’s foreign reserves hit their highest since 2011’s political turmoil, registering $26.3 billion at the end of January 2017, up from $24.2 billion in December 2016.
Egypt held $36 billion in reserves before the 2011 uprising, which overthrew president Hosni Mubarak, ushered in a period of political turmoil that scared away tourists and foreign investors--two key sources of foreign currency.
On 3 November 2016, the CBE decided to freely float the pound and raise key interest rates as part of a set of reforms aimed at solving a dollar scarcity and eradicating currency trading on the black market.
Shortly following the liberalisation of the pound, the IMF disbursed an initial $2.75 billion to Egypt as part of a $12 billion loan facility.
A second tranche of the IMF loan is set to be disbursed to Cairo in late April.