Egypt Secures $500 Million Loan from Three Banks to Support Education and Healthcare

Egypt’s Finance Ministry has secured a $500 million syndicated loan from Deutsche Bank, Bahrain’s Arab Banking Corporation (Bank ABC) and Kuwait’s Arab Investment and Export Credit Guarantee Corporation (Daman)to support education and healthcare spending.

“The new loan will be utilised to implement health and educational projects, in a new partnership with these three banks and it will contribute to diversifying funding sources, through innovative, diverse, and more sustainable tools, and in response to environmental and governance requirements, the Ministry said.

The Ministry has secured the loan for the first time with the guarantee of one of the multilateral financial institutions, which indicates the importance of the trend towards a greater role for international institutions in providing financing at a low cost, the Ministry said.

The Ministry also expressed its appreciation for the interest it received from international and regional banks, which helps the Egyptian government to diversify sources of financing by taking advantage of innovative financing tools supported by Multilateral partners as well as international and regional banks.

The proposal to avail the loan came to light for the first time in October when Egypt’s Finance Minister Mohamed Maait told media on the sidelines of the IMF and World Bank’s annual meeting in Marrakesh in Morocco.

Following November’s samurai bond issuance and October’s panda bond issuance, the completion of the $500 million loan wraps up the Madbouly government’s target of raising $1.5 billion by the end of the year in fresh borrowing that Maait laid out in Marrakech.

Medium Term Loan

The loan is for medium-term with a seven-year tenor and the interest rate is reportedly 11.1% interest. The Arab Investment and Export Credit Guarantee Corporation is guaranteeing 5.75% of the interest.

The money will be spent in renovating classrooms, the universal health ins. system, and upgrading hospitals under Haya Karima.

The Finance Ministry has appointed law firm Helmy, Hamza & Partners — Baker McKenzie’s Cairo office — as the local legal advisor in the negotiations, while Reed Smith acted as the international legal advisor, an official release added.

It may be recalled that the Egyptian House of Representatives has approved the $500 million loan agreement on October 31.

During the second edition of Africa Health ExCon in June, Egypt’s Minister of Health, and Population Khaled Abdel Ghaffar announced that the government has successfully executed 965 healthcare projects, with a total investment cost of $2.95 billion.

He further revealed that Egypt’s goals for 2023 include developing and establishing 53 hospitals with a budget of $900 million. Additionally, Egypt plans to construct three hospitals in 2024 for $460 million and an additional 14 hospitals in 2025, requiring investments of $630 million.