Reprieve to Egyptian as govt secures US$1.1bn from ITFC to fund import of basic commodities

EGYPT – The International Islamic Trade Finance Corporation (ITFC) will provide US$1.1 billion of funding to help Egypt with imports of petroleum products and basic commodities in 2020, Egypt’s petroleum and supply ministries has revealed.

Reuters reported that the funds are part of a US$3 billion agreement between Egypt and ITFC signed in January 2018.

Last year, acute shortages of foreign currency caused delays in some payments by Egypt’s General Authority for Supply commodities (GASC), which was a signatory to the deal, to global suppliers.

The financing at the time ensured dollars were available for the state buyer to use for payment at some of its international purchasing tenders.

Cairo pays around $1.5 billion annually for grain as part of a bread subsidy program on which many of Egypt’s almost 100 million people depend.

Egypt is traditionally the largest importer of wheat, as its per capita consumption of bread products ranks among the highest in the world.

Wheat consumption in 2018-19 is forecast at 20.1 million tonnes by the USDA, up 1.5% from the 2017-18 estimate of 19.8 million tonnes.

This is against a production capacity of about 8.45 million tonnes. This implies that the country would have to import about 12.5 million tonnes to meet local needs.

The USDA said the uptick is attributed to “a 1.6% increase in food, seed and industrial use (FSI) consumption.

The rise in FSI wheat consumption is attributable to population growth of about 2.5%.”

“This agreement is a genuine partnership with the International Islamic Trade Finance Corporation in order to provide more basic goods to citizens,” Supply Minister Ali Moselhy said in a statement, which did not specify what portion of the money would be allocated to wheat purchases.

Hani Salem Sonbol, CEO of ITFC, said the agreement would also support the “Better Cotton Initiative,” a program being implemented by the UN Industrial Development Organization.

The International Islamic Trade Finance Corporation is an autonomous entity within the Islamic Development Bank Group created with the purpose of advancing trade to improve the economic condition and livelihood of people across the Islamic world.

ITFC has consolidated all the trade finance businesses that used to be handled by various windows within the IDB Group and deploys its expertise and funds to businesses and governments in its member countries.

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