The European Bank for Reconstruction and Development (EBRD) announced, on Wednesday, that its investments in Egypt almost tripled year-on-year (y-o-y) to €459m in the first half (H1) of 2020.
This compares to the €166m granted to Egypt by the bank in 2019, as it rapidly responded to the needs of emerging economies grappling with the impacts of the novel coronavirus (COVID-19) pandemic.
In a press statement, the EBRD explained that the first project rolled out in Egypt following the pandemic’s outbreak was a $200m financing package granted to QNB ALAHLI. The funding, which was followed by a similar arrangement with the National Bank of Egypt (NBE), went towards supporting local businesses and trade.
The EBRD also revealed that local businesses received an additional boost through credit lines to the Commercial International Bank – Egypt (CIB) and the National Bank of Kuwait – Egypt (NBKE). The latter two banks each received $100m loans, providing the liquidity needed to face the current crisis’ economic impacts.
“The EBRD’s total financing in all 38 economies where the bank invests rose to just over €5bn in the first six months of the year, compared with €3.7bn a year earlier, and a previous first half record of €3.9bn in 2016,” according to the bank’s press statement.
It aims to invest in promoting sustainable and inclusive private sector development across 38 emerging economies, ranging from Estonia to Egypt and Morocco. The economic impacts of the coronavirus on the EBRD regions have been severe, and it warned of “unprecedented uncertainty” in its latest forecast in May.
In March, the EBRD unveiled its Solidarity Package to provide financial support due to the coronavirus. The package ensures a series of measures are put in place to meet immediate regional needs, whilst also preparing for a robust recovery once the pandemic is over.
According to the bank, a key pillar of its Solidarity Package is a framework providing emergency liquidity and working capital to existing clients.
“Demand for the emergency funding has been strong, and the new facility accounted for over €1bn of total EBRD financing in the month of June alone,” it said.
In April, the EBRD said it would dedicate the entirety of its activities to tackling the coronavirus pandemic, and that it expects to invest some €21bn to the end of 2021.
The bank mentioned that, since the outbreak of the virus, the pace of disbursements has been consistently faster than in 2019. Donors have stepped up to support the Bank’s Solidarity Package with a record volume of contributions for the first half of the year, providing much-needed grant and concessional co-financing.
According to the EBRD, the coronavirus has severely affected trade flows and access to trade finance, and it has, in turn, increased support for commerce under its Trade Facilitation Programme.
It pointed out to that in the first half (H1) of 2020, it has financed over 1,000 trade deals with a record turnover of €1.9bn. It has raised its total exposure limit under the programme by 50%, to a total of €3bn.
In addition to focusing on the immediate response to the coronavirus, the EBRD is working to ensure that recovery from the pandemic will be resilient and sustainable. This would be in line with global climate goals that preserve commitments to a low carbon economy. In July, the EBRD unveiled ambitious proposals to become a majority “green” bank by 2025.