Trend towards external funding targets availability of greater liquidity for banking sector to lend private sector

Minister of Finance, Hany Kadry Dimian, and the Egyptian governor in the Islamic Development Bank announced that the Islamic Development Bank’s Executive Directors Board, during their last meeting in Jeddah approved the provision of $ 8.424 Million in order to finance two projects for Petroleum and Aviation sectors in Egypt. The first project is the development of Asyut’s petroleum refinery for the benefit of  the General  Egyptian Petroleum Corporation, with funding value of  $ 198 Million will be paid in 15 years, in addition to three years preparation and implementation period. The second project  is the first phase of  the International Airport Development project in Sharm El-Sheikh for the benefit of the Holding Company for Airports and Air Navigation, amounts the value of  $ 8.226 Million, will be paid in 15 years ,in addition to four years implementation period.

The Minister said that the Islamic Bank will provide this funding in form of tenancy contract, one of the Islamic funding forms, whereas Ministry of Finance will provide government payment guarantee.

This funding results from the active cooperation between Government of Egypt and the Islamic Development Bank group, within the bank’s support for the Egyptian economy, as Egypt’s main partner in enhancing development plans.  

He added that the government diversifies funding sources for major projects which are being implemented currently; whereas we benefit from concessional funding offered by the donors and Egypt partners such as: The Islamic Development Bank which already participates in financing a large number of vital projects in the Egyptian economy with a finance portfolio estimated at  $ 2.5 billion, the total amount of bank group contributions in Egypt since the establishment of the bank till now is about  $ 10.1 billion, also the bank contributions from 3/7/2013 till the end of August 2014 reached about $ 1.185 billion.

The minister mentioned that depending on sources of external funding for the government plans and projects avails larger financial space for funding development and private sector projects.

He confirmed that there will be more cooperation with the Islamic Development Bank in the coming period; it is expected that the executive directors board of the bank, during its meeting in October, will discuss Egypt's request from the bank for a contribution with the value of $ 223.2 million for financing the second phase in the development project of Sharm El-Sheikh airport. The bank currently studies the Egyptian- Saudi electricity linkage; whereas Egypt has presented an official request to the bank in order to obtain funding amounts the value of $ 160 million for such significant project. Also many public agencies consider receiving funding from the bank to implement several projects within the government efforts to accelerate the development operations and expand its projects all over the country. 

The minister added that the funding of the Islamic Bank Group for the infrastructure projects in Egypt is a clear evidence of the bank’s confidence in the Egyptian economy and in the procedures taken by the government to activate the economy to a wider horizons, as well it is a powerful message to the local, regional and international parties which indicating that the Egyptian economy is recovering, the investment climate in Egypt is safe, favorable and it will be a promising horizons for the economy in  the next phase.