China injects $956m into Egypt’s central bank

Reuters/Fan Jiashan

• CDB has $6.5bn of loans to Egypt
• $500m of ‘panda bonds’ last month
• Pressure to devalue Egyptian pound

The China Development Bank (CDB) has injected ¥7 billion ($956 million) into Egypt’s central bank to help finance projects agreed upon during the third Belt and Road Initiative (BRI) summit last month. 

The funds are part of a loan agreement signed during the summit in Beijing, as well as the nine programmes outlined in 2021’s Africa-China Cooperation, according to a CDB statement.

CDB said the loan would promote “further in-depth integration of the BRI and Egypt’s Vision 2030, as well as stimulate fresh financial movement to boost economic, trade, and financial cooperation between China and Egypt”.

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As of the third quarter of 2023, CDB has issued loans to Egypt with a total value of more than $6.5 billion. They include a line of credit worth $1 billion, and loans for small and medium-sized companies through two of its largest banks, the National Bank of Egypt and Banque Misr.

The CDB statement also noted that it has financed the electricity transmission network in Egypt with a capacity of 500 kilowatts.

Egypt is experiencing a severe shortage of foreign currency liquidity and a rise in its external debt obligations, with both the IMF and Gulf countries holding off from providing any further financial support until Cairo devalues its currency and implements economic reforms. 

On October 17, Egypt issued $500 million of sustainable panda bonds on the Chinese financial market, becoming the first Mena country to do so. 

Mohamed Maait, Egypt’s finance minister, said the panda bonds – securities denominated in yuan but issued by non-Chinese borrowers – were part of government efforts to diversify financing sources.

They will be used to finance projects that support sustainable development goals, in line with Egypt’s National Climate Change Strategy 2050.