An Egyptian worker takes a rest as he watches bulldozers and trucks at the site of the upgrade project of the Suez Canal, in Ismailia, Egypt, Tuesday, Aug. 12, 2014 (Photo: AP)
The investment certificates which the government of Egypt will issue to finance a project to extend the Suez Canal will be denominated in Egyptian pounds only, the governor of the Central Bank of Egypt (CBE) said on Sunday.
Speaking at a press conference, Hisham Ramez explained that Egyptians living abroad will be able to buy the certificates in Egyptian pounds through local banks with ties to the issuant banks in Egypt.
Earlier this month, Egypt started digging a 72 kilometre-long waterway parallel to the Suez Canal, with the aim of increasing the capacity of the vital international shipping route.
According to official declarations to the press, the government had initially toyed with the idea of issuing dollar-denominated certificates for Egyptians residing overseas.
Certificates will not be issuable to foreigners, so as to preserve the national character of the canal, historically a sensitive issue for Egyptians, explained officials.
The certificates will be issued at a value of LE10, LE100, LE1000 and its multiples, with a maturity of five years at a 12 percent interest rate.
The low value certificates, worth LE10 and LE100, will be redeemable with cumulative interest, at the end of the five years, while holders of certificates worth LE1000 and its multiples will reap a 12 percent interest on a quarterly basis.
State-owned entities Bank Misr, the National Bank of Egypt, Banque du Caire, and the Suez Canal Bank will issue the certificates, which other banks will be able to order for customers upon request.
Certificates will be available to Egyptian individuals, corporations and legal entities but will not be tradable.
Holders of the certificates will have the right to a loan from the issuant bank worth up to 90 percent of their certificate value.
The finance ministry is guaranteeing the certificates, which will be repaid from Suez Canal revenues.
Banks will service orders for certificates up until the CBE has collected the LE60 billion needed to finance the digging of the new waterway.
The central bank has already printed 6 million certificates, said Ramez, and is in the process of printing more certificates.
The certificates will be issued as soon as the president ratifies the legislation for it, said Ramez, without giving further details as to the timing of the issuance.