CDB provides RMB 7 billion loan to Central Bank of Egypt to strengthen the country’s foreign reserves and preserve macroeconomic stability (Linked to Record ID#52882, #89462, and #52881)

Project narrative

On January 23, 2016, the President of China, Xi Jinping, and the Egyptian President, Abdel Fattah El-Sisi, signed a liquidity support facility (LSF) agreement wherein China Development Bank agreed to provide a $1 billion loan to the Central Bank of Egypt. The loan, captured via Record ID#52881, was reportedly provided on the following terms: an 11-year maturity, a 3-year grace period, and an interest rate of 4.7352%. The purpose of the loan was to help the Central Bank of Egypt shore up the country’s foreign exchange reserves in the face of pressure on the Egyptian pound. According to CDB, its Qingdao Branch and the CDB Cairo Representative Office organized a $900 million disbursement shortly after the LSF agreement was signed. Reporting from the Central Bank of Egypt suggests that CDB subsequently ‘upsized’ the face value of the liquidity support facility agreement from $1 billion to $2 billion. However, the precise timing of this increase in the face value of the loan is unknown. The Central Bank of Egypt reports that the amount outstanding under the LSF was $1.8 billion as of September 2019, $1.5 billion as of September 2020, $1.6 billion as of December 2020, $1.3 billion as of March 2021, $1.3 billion as of June 2021, $1.1 billion as of September 2021, $1.1 billion as of December 2021, $842.9 million as of March 2022, $817.8 million as of June 2022, $560.5 million as of September 2022, $567.2 million as of December 2022. On October 18, 2023, during the Third Belt and Road Forum for International Cooperation in Beijing, China Development Bank (CDB) and the Central Bank of Egypt signed an RMB 7 billion liquidity support facility (LSF) agreement. The borrowing terms of the loan include a 5-year maturity, a 2-year maturity, and a 3.7% interest rate.The proceeds of the loan were to be used by the borrower to increase RMB liquidity and shore up the country’s foreign exchange reserves. This new liquidity support facility effectively refinanced and replaced the previous LSF. The new loan fully disbursed on October 30, 2023. The Central Bank of Egypt reports that the amount outstanding under the LSF was $1.1 billion in December 2023, and $963 million in June 2024.