The Board of Directors of the African Development Bank Group approved a partial credit guarantee of $345 M in RMB equivalent to Egypt to increase access to the panda bond market to finance green and social projects.
The bank group’s partial credit guarantee will allow Egypt to raise the equivalent of $500 M in the market for panda bonds, which are bonds denominated in Chinese yuan and issued by foreign borrowers.
Bond proceeds will be used for clean transportation, renewable energy, energy efficiency, sustainable water and sanitation management, MSME financing, basic health services initiatives, and more. These sectors are given priority within the framework of sustainable sovereign financing in Egypt.
Minister of International Cooperation, Dr. Rania Al-Mashat, said: The new agreement with the African Development Bank adds a new dimension to the strategic partnership that focuses on promoting the transition towards renewable energy and financing sustainable infrastructure projects.
She continued: It also pushes towards diversifying financing sources and building on the efforts and measures taken by the state earlier, including green bonds launched at the end of 2020.
The project will promote inclusive growth and advance Egypt’s green and social goals. The sectors identified under the SFSF align closely with the Bank’s country strategy for Egypt and its top five operating priorities.
It is worth noting that Egypt has been active in sustainable and green bond markets since 2020 when it issued the first green bonds in the Middle East and North Africa region.
And in 2022, ahead of the COP27 conference held in the Red Sea resort of Sharm el-Sheikh, the Egyptian Ministry of Finance launched the country’s sustainable sovereign financing framework program to affirm its support and commitment to using various tools to finance green projects in addition to green bond issues; these include sustainable, social, blue, Sukuk, and other debt instruments.
The framework defines procedures and rules for resource utilization, project selection, monitoring, and evaluation in line with international best practices.
