African Export-Import Bank provides US$500 million in import financing

The African Export-Import Bank (Afreximbank) and the Central Bank of Egypt (CBE) signed a US$500 million financing agreement aimed at maintaining the flow of strategic commodities into Egypt, as the country faces an increasingly severe shortage of foreign currency.

Under the terms of the deal, Afreximbank will provide funds to Egyptian importers who are approved by the CBE as supporting Egypt’s productive sector, the bank said in a Friday statement.

Afreximbank President Benedict Oramah said the bank is “determined to support the efforts of the Egyptian authorities to address the foreign currency liquidity challenges confronting the country in order to reciprocate the strong support it has enjoyed from Egypt,” the statement added.

Egypt is facing a shortage of foreign currency as traditional sources of hard currency like tourism and foreign investment have remained low while Suez Canal revenue stagnates. Meanwhile, efforts to hold the pound steady against the strengthening US dollar have brought foreign reserves to a critical level.

The government has responded by tightening restrictions for imports of consumer goods and raising taxes on imported items it considers to be luxury goods. Importers of essential goods — including basic food items, medicine and industrial equipment and inputs — have priority for dollars, but there are indications that state-owned companies are having trouble paying for commodity imports. Although the government denies facing liquidity problems, it has been plagued by reports of delayed payments from suppliers of vital goods like oil and wheat.

In the meantime, Egypt has turned to a variety of funders to keep the economy afloat. Political allies in the Arab Gulf have granted or loaned billions of dollars since former President Mohammed Morsi was overthrown in 2013. More recently, Egypt has signed loan agreements with international financiers, including China, the African Development Bank and the World Bank.