ITFC extends Egypt US$3B in additional credit to cover wheat imports amid rising wheat prices

EGYPTSaudi Arabia-based International Islamic Trade Finance Corporation (ITFC) has doubled its credit limit to Egypt to US$6 billion from US$3 billion to cover the country’s imports of wheat, Egypt’s supply minister said in a TV interview.

Egypt is grappling with a loss in tourism revenue from Russian and Ukrainian visitors to Red Sea resorts and the war in Ukraine has left the country facing higher costs for its substantial wheat import needs. Annual consumption totals 20 million tons.

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This extension of credit comes as a relief for the authorities who will be able to limit the outflow of foreign currencies in the context of the devaluation of the Egyptian pound in March after foreign investors pulled billions of dollars out of Egyptian treasury markets, putting pressure on the currency.

The Central Bank of Egypt also raised its interest rates last week for a second time since the invasion, citing an increase in annual urban inflation to 13.1% in April, its highest since May 2019.

However, Minister of Supply and Internal Trade Ali El-Moselhi Egypt’s claims that purchases of wheat from abroad do not represent any pressure on the Central Bank of Egypt (CBE) as the ITFC pays and covers the country’s wheat imports.

As the world’s largest importer, the government has announced that the increase in wheat prices could require the disbursement of an additional envelope of 12 to 15 billion pounds to deploy in 2021/2022.

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In total, the country plans to spend US$4.4 billion on wheat imports during the campaign on a subsidy program from which more than 60 million people stand to benefit.

Last week, the Egyptian Cabinet Media Center had denied reports regarding a decline in Egypt’s strategic reserves of wheat due to instability in the global food market.

This is despite the fact that Egypt is still waiting for 300,000-ton wheat cargoes stuck in Ukraine. The shipments were booked by the Egyptian General Authority for Supply Commodities (GASC) and were meant for delivery in February and March.

In the face of soaring cereal prices linked to the conflict between Russia and Ukraine, the government opted to diversify its sources toward India and strengthen supplies from local producers.

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