Egypt issues report of 2023 debt swaps for achieving SDGs

20 / 12 / 2023

By Marwa Nassar - -

Egypt implemented debt swap programs with Germany and Italy at $720 m
Egypt signed historic MoU with China on debt swap

The Ministry of International Cooperation issued its annual report entitled “International Partnerships for Sustainable Development: Platforms for Policy and Practice,” which highlighted debt swaps during 2023 with an aim to achieve sustainable development through financing priority projects.

The report stated that the debt swap mechanism is a means to enhance the financing available for development projects through signing agreements under which a portion of the debts owed to development partner countries is exchanged, with the aim of reducing the burden of external debt, achieving sustainable development through financing priority projects, and supporting efforts to achieve SDGs.

Over the past twenty years, the Egyptian government has succeeded in implementing a debt swap program with the Italian and German governments, with a value exceeding $720 million, to implement nearly 120 projects in various development fields.

The value of the swap program with the Italian side reached 350 million dollars to support achieving sustainable development in Egypt in line with national goals. In addition, the government of the Federal Republic of Germany, during the G8 summit in Deauville in May 2011, agreed to offer a debt swap worth €240 million to implement development projects in Egypt aimed at enhancing job creation, competitiveness of the private sector, and energy.

Egypt and Italy started the implementation of the first phase of the debt swap program for development with Italy began in 2001, during which 54 projects were implemented. The second phase was signed in 2007 and witnessed the implementation of 32 projects, then the third and final phase in the year 2012, during which a number of projects are being implemented; the total amount of the three phases is about $350 million. Through it, many projects have been implemented.

Last May, an agreement was signed to extend the work of the third tranche until 2024 with the Italian ambassador to implement many projects. At the top of these projects, in the food security sector, is the project “Establishing field silos and an information technology system for wheat management” at a value of 416.7 million pounds, and the second phase of the “Development of fish farming in Egypt” project at a value of 138.9 million pounds, and in the environment sector, financing the third phase of the “Solid Waste Management in Minya Governorate” project at a value of 70.5 million pounds.

The annual report stated that the debt swap program with Germany began in 2011 at a value of €240 million, and so far the first and second phases have been implemented. The first was in 2012, at a value of $70 million and the second phase was at a value of $90 million.

The third phase is currently being implemented at a value of €80 million. The third phase was agreed to be the “School Nutrition” project to combat dropout from education and child labor, and a financing agreement for the electricity transmission project worth €54 million remaining from the third tranche with the Ministry of Electricity and Renewable Energy within the NWFE program.

Meanwhile, the report said that this year witnessed the signing of a memorandum of understanding, the first of its kind, for a debt swap program with China. This is the first in the history of cooperation between Egypt and China, as well as the first signed by China with other countries.

The memorandum of understanding aims to enhance cooperation between the two countries in the field of debt swaps in order to implement development projects, which is one of the innovative financing tools that works to support the efforts of the Egyptian government in partnership with the Chinese side to achieve sustainable development, by using tranches of Chinese debt to implement development projects. The projects to be funded within the program are currently being agreed upon.

The annual report indicated that the debt swap between Egypt and China reflects the strength of cooperation between the two countries, and their desire to explore new horizons and areas of cooperation, in order to enhance the comprehensive strategic partnership between the two countries.