An official of the Central Bank of Egypt (CBE) stated Monday that the first instalment of a Turkish loan is due before the end of October, as stipulated in the agreement signed during the visit of the President Morsy to Ankara last September.
The agreement instructs that Egypt would receive the first half of the loan, which amounts to $1 billion, by the end of the month, while the other half will be received by the beginning of the new year, the official told Al-Watan Newspaper. The loan is to be utilised in shore up the budget deficit.
The loan is to mature in five years with an interest rate under 1 per cent; Egypt will begin repaying the loan after a three-year grace period. The whole amount will be included in the international reserve’s accounts at the CBE, which will boost the bank’s capacity to provide a cover of foreign currency for the importation of strategic goods.
The Turkish loan to Egypt has triggered a political crisis in Turkey. The Middle East News Agency( MENA) reported earlier that the opposition leader in the Turkish Parliament Muharram İnce of the Republican People Party has questioned the national interest of the loan in the light of the economic problems incurred by the country. He asked in a query presented to the speaker of the parliament whether the objective of the loan was to guarantee the sustainability of the ruling Muslim Brotherhood in power.
Turkey has agreed to give Egypt an aid package of $2 billion, 50 per cent of which would be received as a loan, while the remaining amount would be in the form of Turkish investments in Egypt and partnerships in infrastructure projects.
The CBE’s data indicate the foreign reserves have fallen by $84 million during September.