Egypt will pay $300mn of the money it owes to foreign oil companies in Egyptian pounds, a Finance Ministry statement said, as part of a $1.5bn repayment scheme designed to revive confidence in its economy battered by years of turmoil.
Egypt has announced it would repay a further $3bn of the $6.3bn it says it owes to foreign oil companies operating in the country in monthly instalments until 2017, hoping this will encourage investment in the energy sector.
Egypt’s foreign currency reserves, which stood at $36bn before autocrat Hosni Mubarak was ousted in 2011, have been under pressure ever since and fell to $17.8bn in November from $18.6bn in October.
Repayment will occur “in phases”, starting on December 1, a statement on the Finance Ministry website said. Prime Minister Hazem el-Beblawi said on December 4 the repayment of $1.5bn had been approved.
This amount will be paid in three tranches, according to the Finance Ministry. It added the agreement between the Finance and Oil Ministries had been reached with the “full co-ordination and cooperation” of the Central Bank which helped provide the foreign currency needed for the payments.
The first tranche of $1bn will be provided by the Central Bank which will deduct the amount in Egyptian pounds from its Finance Ministry accounts, according to the statement.
The second tranche of $300mn will be paid for by the Finance Ministry in Egyptian pounds. The state-run Egyptian General Petroleum Corp will pay the remaining $200mn, the ministry said.
Financial disclosures by firms including BP, BG Group, Edison and TransGlobe Energy show Egypt owed them more than $5.2bn at the end of 2012.
In the week after the army removed former president Mohamed Mursi in July following mass protests against his rule, Saudi Arabia, Kuwait and the UAE promised Egypt a total of $12bn in grants, interest-free loans and oil products.
