Egypt started paying off debts it owes foreign oil and gas companies operating in the country having set aside $1.5bn for the payments.
According to Reuters, a cabinet statement revealed that the ongoing payment which just resumed, accounts for 20% of the arrears owed to companies. it stated that the rest of the arrears would be paid off through a scheduled plan.
Egypt started accumulating arrears to companies and contractors during a long period of foreign currency shortage.
The menacing shortage has eased lately after Egypt announced a record deal with UAE, devalued its currency, and also got aid and expanded its program with the IMF.
A source close to the companies told Reuters that Egypt has informed one of the companies that it would start paying back up to $1.5bn of the total arrears as soon as Tuesday.
Another industry source stated that Egypt has set aside $1.5bn for the payments and the idea was to pay all companies at least 20% of what they are being owed.
Egypt’s Serious Foreign currency scarcity peaked in 2022 leading to various restrictions on imports and government payments.
The situation eased after Egypt signed a record deal with UAE sovereign fund ADQ for the development of prime land at Ras El Hekma on the Mediterranean coast. Egypt said it has received $10bn of new funds out of the $24bn from the deal.
Egypt also signed various deals and aid packages including an expanded $8bn financial package with the IMF and additional funding from the World Bank and European Union.
All these new funds facilitated an end to Egypt’s foreign exchange scarcity making it possible for them to clear their arrears.
What To Know
- Some of the top foreign oil companies operating in Egypt include Eni SpA, BP PLC, Shell PLC, Total Energies SE, and ExxonMobil Corporation.
- Egypt’s chronic foreign exchange scarcity peaked in 2022 leading to curbed local business activity, backlogs at ports, and delays in payment for commodities including arrears owed to foreign oil companies.
- The Foreign exchange scarcity has led to the devaluation of Egyptian local currency causing it to lose about two third of its value against the dollar.