CAIRO: Egypt is scheduled to repay a $700 million six-month premium on the foreign debt owed to the Paris Club in the coming few days.
On July 4, the Central Bank of Egypt (CBE) repaid a $700 million premium to the Paris Club, an informal group of financial officials from 19 of the world’s largest economies. The group provides financial services, including debt restructuring relief and cancellation to indebted countries and their creditors.
A July repayment was Egypt’s first foreign repayment in hard currency after President Abdel Fatah al-Sisi was inaugurated.
“Egypt is set to pay back around $1.9 billion of its foreign debt during 2015, despite the heavy pressure on the country’s foreign reserves due to low revenues from tourism and foreign direct investment (FDI) since 2011 Revolution,” a senior government official told Youm7 exclusively Wednesday.
During 2015, the CBE will repay two premiums, each worth $700 million to Paris Club in January and July, in addition to a $500 million Qatari deposit by the 2nd half of the year, the source added.
“Timely repayment of foreign debt premiums is a top priority for the CBE in spite of the tough economic circumstance in Egypt,” the source told Youm7.
Egypt’s foreign reserves declined by $1.27 million at the end of November to $15.9 billion from $16.9 billion in October, the CBE announced on its official website last month.
Reserves recorded a $38 million increase in October, and November’s decline follows the repayment of a $250 million deposit to Qatar Nov. 28, upon an official request from Doha.
The foreign reserve allows the government to purchase basic commodities, such as wheat and petroleum products, and to pay off premiums and interest on foreign debts.Egypt’s foreign reserves witnessed a sharp decline after former President Hosni Mubarak’s resignation in 2011 from $35.8 billion at the end of December in 2010.
However, the country’s foreign reserves are greatly expected to improve in the coming period as the government is set to offer mega investment projects during the Economic Summit scheduled in March to lure fresh investment. Also, revenues from tourism industry have been improving in light of better security situations.