Skip Ribbon Commands
Skip to main content
Sign In

Debt Swap

The Paris Club agreement signed in May 1991 on rescheduling Egypt's foreign debt due to the member states of Paris Club serves as the framework organizing debt swap programs signed with Egypt's development partners with a view to realizing the following:

  • Lessening the external debt burden by financing development and investment projects. 

  • Supporting the state budget.

  • Encouraging investments in Egypt.

  • Exempting the state from having to secure the required foreign currency for repayment.

Egypt has signed debt swap agreements with each of Germany, Italy, France, Switzerland and Belgium.

Egypt signed the Debt Swap Agreement with Germany on 15/11/2001 regarding the sum of EUR 204.5 million, representing part of the debt service fees due on Egypt to Germany for the period from 1/1/2002 to 1/1/2016.  According to the Agreement, the equivalent amount in local currency will be used for financing the following:

  • 50% for financing projects serving poverty reduction, environment protection and basic education development.

  • 50% allocated to the Ministry of Finance for supporting the state budget.

 

The Debt Swap Agreement signed with Germany will be implemented on eight phases, as follows:

Phase I:

The Executive Agreement was signed on 9/5/2002 regarding the sum of EUR 38.3 million. 50% of its equivalent in local currency was allocated to support the state budget while the other 50%, amounting to EUR 19.2 million, equivalent to approximately EGP 1114.101 million, was used for financing the public works program which has already been executed and was finalized at the beginning of 2009 through the Social Development Fund (SDF). The executed works include paving rural roads, potable water works in the most poverty stricken villages, wastewater works and drainage system coverage works.

Phase II:

The Executive Agreement was signed on 28/12/2003 regarding the sum of approximately EUR 30 million, where 50% of its equivalent in local currency was allocated to support the state budget while the other 50%, amounting to approximately EUR 15 million, equivalent to approximately EGP 120.175 million was used for financing the construction of primary schools through the General Authority For Educational Buildings (GAEB). 82 schools have been constructed and were delivered on 31/12/2008.

Phase III:

The Executive Agreement was signed on 20/12/2005 regarding the sum of approximately EUR 30 million, where 50% of its equivalent in local currency was allocated to support the state budget while the other 50%, amounting to approximately EUR 15 million, equivalent to approximately EGP 108.169 million, was used for financing the public works program through the SDF, which included paving rural roads, potable water works in the most poverty stricken villages, wastewater works and drainage system coverage works.

Phase IV:

The Executive Agreement was signed on 19/6/2007 regarding the sum of approximately EUR 20 million, where 50% of its equivalent in local currency was allocated to support the state budget while the other 50%, amounting to approximately EUR 10 million (distributed as follows: EUR 6 million for the renovation of schools and EUR 6 million allocated to the Ministry of Education), equivalent to approximately EGP 79.597 million was allocated to the Schools Construction and Renovation Program in the governorates of Qena, Fayoum, Minia and Assuit. The execution situation is as follows:

  • Contractors were appointed for the renovation of 95 schools and the work is in progress. 

  • The sum of EGP 10.963 million, representing 13.8% of the allocated amount, was spent until March 2012. 

  • The sum of EGP 10.962 million out of the amount allocated for this phase (EGP 79.596 million) was spent until 11/3/2012 for financing the Schools Construction and Renovation Program.

Phase V:

The Executive Agreement was signed on 5/6/2008 regarding the sum of approximately EUR 19.518 million, where 50% of its equivalent in local currency was allocated to support the state budget while the other 50%, amounting to approximately EUR 9.759 million, equivalent to approximately EGP 81.285 million, was allocated to financing Qena Wastewater Infrastructure Project.

  • 7 tenders were awarded to companies affiliated to the Water and Wastewater Holding Company for the supply of equipment and trucks for the wastewater project in Upper Egypt, including suction trucks, drillers and pickup trucks.

  • 6 tenders are held for the supply of closed screen circuits, heavy duty sewage disposal trucks and lorry trucks of different capacities. 

  • The sum of EGP 18.944 million, representing 23.3% of the allocated amount was spent until 30/6/2011.

Phase VI:

The Executive Agreement was signed on 24/6/2009 regarding the sum of approximately EUR 20 million, where 50% of its equivalent in local currency was allocated to support the state budget while the other 50%, amounting to approximately EUR 10 million, equivalent to approximately EGP 78.299 million was allocated to the Primary Schools Construction and Renovation Program.  EUR 8 million was allocated for the construction and maintenance of 37 schools in Fayoum, Minia and Assuit (carried out by GAEB) and EUR 2 million was allocated to the Ministry of Education. The execution situation is as follows:

  • 75% of the works were assigned to contractors for the construction of 15 schools and the renovation of 16 schools. Implementation is in progress.

  • The documents regarding the remaining 25% of the works are being finalized for holding a tender for the execution of these works. 

  • The sum of EGP 1.215, representing only 1.6% of the allocated amount, was been spent until 30/6/2011.

  • The sum of 2.985 was spent until 11/3/2012.

Phase VII :

The Executive Agreement was signed on 22/6/2010 regarding the sum of approximately EUR 40 million, where 50% of its equivalent in local currency was allocated to support the state budget while the other 50%, amounting to approximately EUR 20 million, equivalent to approximately EGP 139.458 million, was allocated to financing the Water and Wastewater Services Improvement Project in low income areas. The execution situation is as follows:

  • The list of water and wastewater projects has been submitted to the German Development Bank (kfW).

  • Works worth EGP 2.791, representing 2% of the allocated amount has been spent until 30/6/2011. 

Phase VIII :

The Executive Agreement was signed on 13/6/2011 regarding the sum of EUR 6.651 million, where 50% of its equivalent in local currency was allocated to support the state budget while the other 50%, amounting to approximately EUR 3.326 million for financing the Project of Fighting Malaria in Ethiopia carried out by the Global Fund to Fight AIDS, Tuberculosis and Malaria. 

Within the framework of the close cooperation between Egypt and Italy three debt swap agreements were signed between both governments to offset part of the installments and interests due on Egypt to Italy:

  • First Debt Swap Agreement signed on 19/2/2001 by virtue of which the sum of USD 149.09 million (equivalent to approximately EGP 819.920 million) is swapped. 

  • Second Debt Swap Agreement signed on 3/6/2007 by virtue of which the sum of USD 100 million (equivalent to approximately EGP 550 million) is swapped for financing development projects.

  • Third Debt Swap Agreement signed on 10/5/2012 by virtue of which the sum of USD 100 million is swapped.

  • The Italian Debt Swap Program is managed by the Debt Swap Management Committee co-chaired by the Minister of Planning and International Cooperation and the Italian Ambassador. 

As per the debt swap agreements an account is opened in which is deposited the equivalent of each installment in local currency on its due date to be used in financing the projects approved by the Management Committee according to the following priority list:

  • Economic and social development.

  • Environment, health and food security.

  • Rural development and poverty reduction. 

  • Supporting NGO's and civil societies in Egypt. 

Current situation of the implementation of Italian debt swap programs:

  • Out of the first tranche, 54 projects were implemented in 23 governorates. 

  • Under the Second Debt Swap Agreement, which is in progress, an agreement was reached for financing 26 projects with EGP 494.427 million.

  • Negotiations are held between both countries regarding the proposed projects to be financed under the Third Debt Swap Agreement.

  • Two French programs are in place for lessening the debt burden on Egypt. The first is the debt swap program, as Egypt signed a Debt Swap Agreement with France on 30/3/1994 for the sum of FF 58 million, representing part of the debt service fee due on Egypt to France for the period 1/4/1994 to 1/1/1998.  The Agreement stipulates that Egypt will be exempted from the settlement of due installments in this amount, provided that its equivalent in local currency is provided to the Social Development Fund (SDF) on their due dates for financing development projects in Egypt. 

  • The second form of bilateral cooperation is the Debt Transfer Agreement signed on 1/5/1995, whereby France has transferred part of the debts due on Egypt worth FF 300 million (EUR 45 million) for supporting French investments in Egypt 

On 25/5/1995, Egypt signed a Debt Swap Agreement with Switzerland concerning CHF 150 million, which is part of the debt due on Egypt to Switzerland. The purpose of signing the Agreement is to lessen the debt burden and push forward economic and social development by financing development projects implemented by civil society organizations in different fields, such as creating job opportunities, raising the income of poor classes, environment projects, literacy and motherhood and childhood projects.  The equivalent of this amount in local currency will be used as follows:

  • 40% (CHF 60 million) will be allocated to the Ministry of Finance for supporting the state budget. 

  • 60% (CHF 90 million, equivalent to EGP 265 million) will be allocated for establishing the Egyptian Swiss Development Fund that will finance development projects in fields securing job opportunities, raising income, improving environmental and social conditions, improving public health, particularly motherhood and childhood.  The Fund will be responsible for the selection and supervision of these projects while civil society organizations will undertake the execution of the projects through commercial banks at which the funds will be deposited. 

Projects financed out of the Debt Swap Agreement have been finalized and all funds allocated, amounting to EGP 668.105 million have been used up (the principle amount allocated to the Fund is EGP 265 million, which has reached EGP 668.105 million up to the date of closing the Fund on 30/4/2010 as a result of accumulated interest on the amount deposited at the Commercial International Bank).

The Fund used the balance of the amount as guarantees for supporting projects that have been successfully implemented by civil society organizations, particularly projects in the fields of water and wastewater, in addition to small size loans.