Yesterday, Monday, a number of members of the Egyptian House of Representatives launched a limited attack on the government for its expansion of borrowing on behalf of the “EgyptAir” company, in light of the financial crisis that airlines and tourism in general have been suffering from since the start of the Corona virus pandemic. But the criticism did not prevent the majority deputies from comfortably passing a bill that would allow the Minister of Finance, Mohamed Maait, to ensure that the holding company for EgyptAir obtains a loan of 5 billion pounds (about 318 million dollars) from two government banks affiliated with the Central Bank of Egypt.
Criticisms focused on the government’s failure to transparently announce the financial position of “EgyptAir”, the complete absence of figures from the draft law submitted by the Council of Ministers, and the multiplicity of previous loans for the same purpose without knowing the company’s position on repayment.
However, these discussions obscured another huge loan, which the deputies did not comment on, and the government did not justify it in the supposed scientific and economic way, to be added to the long list of huge loans that Egypt has obtained since the rise of President Abdel Fattah Al-Sisi to power, without a transparent announcement and in violation of the constitution and the law. Sometimes, and in a way that does not guarantee the right of future generations to know the method of repayment and future management of these standard debts. This last loan, which was approved by the Council without discussion, will be from France, with a value of approximately one billion and 800 million euros, which will be directed to the so-called “priority” projects. months, so that the agreement becomes a fait accompli, and the offer is a formal procedure.
The selection of the lenders and financiers of the projects is done in secret and without justification for the method of selecting these entities and their countries
According to the government, the funds of this loan will be directed to transportation projects in railways, urban transportation, energy, water treatment, agri-food, technology transfer facilitation, and professional development of skilled and unskilled labour. It will also be used in the project to supply 55 trains for the first line of the Cairo Metro, at a value of 776 million euros within four years, and to contribute to the rehabilitation project of the Mansoura-Damietta railway, with a value of 95 million euros, and the Abu Qir metro rehabilitation project at a value of 250 million euros, and a railway construction project. Aswan-Toshka-Wadi Halfa Steel, and the construction of the Robeki-Tenth of Ramadan-Belbeis railway, with a value of 250 million euros, in addition to a number of projects for the Ministries of Electricity and Irrigation.
The government did not reveal its plan to repay this loan, or the extent to which it can finance the required amounts from investment funds or local or international banks, which is consistent with its usual trend, which brought the external debt to 131.5 billion dollars during the past year, an increase of 14 percent from the previous one. Also, the selection of the lenders and financiers of the projects is done in secret and without justifications for the method of choosing these parties and their countries, in light of the regime’s desire to distribute the sources of deals and agreements to ensure alleviation of political pressures on it, especially from major Western countries such as Germany, Britain and France.
The number of debts this year seems likely to increase significantly, as agreements worth billions of pounds were signed during the past five months only, and Al-Araby Al-Jadeed monitors what has been formally concluded and ratified by the House of Representatives and the President of the Republic.
The most recent episode, before the French loan, was a borrowing agreement from the International Bank for Reconstruction and Development last June, to support the universal health insurance system in the amount of $400 million. Note that, under the pretext of the emergency response to combat the Corona pandemic, Egypt had previously borrowed 50 million dollars from the World Bank as well. Immediately before that, a loan agreement was signed by the “OPEC Fund for International Development”, within the framework of the third phase of development of medium, small and micro enterprises, amounting to 95 million dollars.
The debt number this year is expected to increase significantly
Last April, Egypt borrowed from the African Development Bank 108 million euros for the Integrated Rural Sanitation Program in Upper Egypt in Luxor. It also borrowed from the International Bank for Reconstruction and Development an amount of 200 million euros to finance an air pollution and climate change management project in Greater Cairo.
In a huge agreement divided into three tranches, Egypt borrowed from Kuwait 175 million Kuwaiti dinars (more than 580 million dollars) to finance the Bahr al-Baqar plant project to improve water quality, which Sisi inaugurated its first phase weeks ago. As for the largest agreement this year, it was in favor of the National Expenditure Authority and “JPMorgan Europe Limited” as the facility agent, and “JP Morgan Chase” Bank of London branch as the main regulator and initial commissioner, and other financial institutions as the original lender, amounting to one billion and 900 million euros. This huge loan was never publicly discussed in the House of Representatives.
The procedures for all loans violate Article 127 of the Constitution
Resuming the loans received from Saudi Arabia since 2016, after ceding the islands of Tiran and Sanafir, Egypt borrowed one million riyals (about $267,000) for the project to establish a university bearing the name of King Salman bin Abdulaziz, within the King Salman Program for the Development of Sinai. The procedures for all these loans disregard Article 127 of the Constitution, which requires that Parliament approve any borrowing agreement before it is signed by the government, and not after its conclusion. This way of dealing with the pro-regime parliament, with disdain and indifference, and a waste of the principles of transparency and oversight and the right of future generations to know the details of long-term and large loans that will entail huge commitments, is a usual policy from Sisi. He had started it by signing the Russian loan agreement to finance the El-Dabaa nuclear project in 2015, which the government said amounted to twenty-five billion euros, and Russia revealed that it had increased to forty-five billion two years ago, without disclosing details related to the payment or the size of the interest, claiming that “Ross” company needed Atom, the Russian government, led to more money, which was translated into a borrowing agreement, which is the increase in the prices of goods, raw materials and utility services necessary for the construction of the Egyptian reactor, compared to the global market price, due to the floating of the Egyptian pound at the end of 2016, and not the increase in the prices of Russian technology, expertise and manpower itself. The details of the Russian loan are subject to a permanent change between the two countries. After Russia was scheduled to start granting Egypt loan payments since 2016, they were delayed to 2018, with the absence of the first payments being compensated by increased amounts in subsequent payments, as it was agreed that Egypt would use the loan for a period of 13 years. Between 2016 and 2028.