Three sources told Reuters on Tuesday that Egypt is expected to complete the procedures for obtaining a $3 billion loan to be used in part to finance sustainable projects, as Egypt tries to recover from the drop in tourism caused by the COVID-19 pandemic.
One of the sources said the financing, arranged by Emirates NBD and First Abu Dhabi Bank follows the repayment of a $2 billion facility earlier this year, which Egypt borrowed last year.
The sources said that part of the loan will be “green”, meaning that the proceeds will be used to fund sustainable projects and part will be compliant with Islamic law. Adding that a group of conventional and Islamic banks are participating in the joint offering.
Two sources said that the new deal was initially marketed to banks at a size of $2 billion, but it was increased due to the increase in subscription in it, while one of the sources indicated that it would need parliamentary approval until it was completed.
In August last year, Egypt raised a $2 billion loan arranged by Emirates NBD and First Abu Dhabi Bank to finance the state budget and support the economy.
Two of the sources said that this facility, which is divided into conventional and Islamic tranches, has a term of one year, while the new loan will have a term of three years.
Credit rating agency Fitch last month affirmed the country’s long-term foreign currency rating at B+ with a stable outlook, saying it had shown stability and resilience during the pandemic, but had a budget deficit of about 7.5% of GDP.
Meantime, the loss of tourism during the pandemic has reduced one of Egypt’s main sources of foreign currency.