Narrative
Full Description
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 $1 billion (RMB 7 billion) 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 in September 2019, $1.5 billion in September 2020, $1.6 billion in December 2020, $1.3 billion in March 2021, $1.3 billion in June 2021, $1.1 billion in September 2021, $1.1 billion in December 2021, $842.9 million in March 2022, $817.8 million in June 2022, $560.5 million as of September 2022, $567.2 million in December 2022, and $1.1 billion in December 2023. Then, 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 LSF agreement (as captured via Record ID#102315). The borrowing terms of the loan are unknown. However, it is known that 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. The loan fully disbursed on October 30, 2023.
Staff comments
1. The Chinese project title is 埃及中央银行境外人民币授信项目. 2. According to an official source (http://qdsq.qingdao.gov.cn/n15752132/upload/dzzz/qdnj/2019/files/basic-html/page312.html), the Qingdao Branch of CDB provided an RMB 7 billion (approximately $1 billion) loan to the Central Bank of Egypt in 2018: “场委员会工作机制，制定风险提示， 2018 年，国家开发银行青岛市分行实现埃及中央银行 70 亿元境外人民. For the time being, AidData has coded the commitment year for the $1 billion LSF upsizing as 2018. However, it is unclear if the original LSF agreement in 2016 was also denominated in RMB. This issue merits further investigation. 3. For the time being, AidData assumes that the same borrowing terms (11-year maturity, 3-year grace period, 4.7352% interest rate) that applied to the 2016 LSF agreement (captured via Record ID#52881) also applied to the 2018 loan. This issue merits further investigation. 4. The amounts outstanding under the LSF that are reported by the borrower likely include the $1 billion loan in 2016 and the RMB 8 billion 'upsizing' of the loan (埃及央行70亿人民币授信项目) in 2018.