by Marwa Yahya
The EBRD board of directors has decided unanimously to turn Egypt into a country of operations with the abstention of only one country’s vote, Turkey, on Wednesday.
“The bank decision is a certification of successful Egypt’s economic and political transition,” said Ambassador Gamal Bayoumy, Secretary General of the Egyptian European Association Agreement at the Ministry of International Cooperation.
The decision mirrors improvement in Egypt’s reputation and image especially regarding anti-corruption laws, economic reforms and the political situation as the country will witness soon the first parliamentary elections since the June 30 uprising, which toppled Islamist rule, Bayoumy told Xinhua.
The presidency in a statement said the EBRD approval of turning Egypt into a country of operations is an international recognition of Egypt’s sound political and economic transition, given that the founding agreement of the EBRD emphasizes that countries, where the EBRD operates, must commit to the principles of democracy, political pluralism and a market-led economy.
The presidency looks forward to the final endorsement of the EBRD board of governors to turn Egypt into a country of operation at the soonest time.
The approval of the bank board of governors is a “protocol decision” that will be reached anyway especially with the unanimous decision of the board of directors, Fakhry al-Fiqqy, former assistant for the IMF executive manager, said.
The approval will improve the level of cooperation between the Egyptian government and the EBRD within a permanent and stable institutional framework, especially after the bank’s office opened in Cairo last November.
“It is very positive step for Egypt,” al-Fiqqy told Xinhua, noting the bank’s approval reflects assurance on Egypt’s capabilities to fulfill its obligations and reforms.
The EBRD has been founded in 1991 to help build a new, post-Cold War era in Central and Eastern Europe.
It includes four Arab countries in its membership: Egypt, Tunisia, Morocco and Jordan.
The bank is “a small model of the Word Bank,” whose membership was only limited to the European countries in its beginning, then it opened the door for other countries all over the world for deeper integration into the global economy, Bayoumy added.
Egypt is a founding member of the bank with nearly 25 million U.S. dollars, which is pittance, but the membership granted the Egyptian government and companies the right to take part in the international bids in the bank’s other member states, Bayoumy, who is also the secretary general for the Arab Investors Union, explained.
Before the decision, Egypt has been granted limited funds from the Bank Mediterranean countries’ small account over the past years, Bayoumy said, adding “now Egypt will be able to penetrate into the bank’s basic funding portfolios.”
Through getting “concessional funding,” he added the government and the private sector will benefit greatly from the bank in the near future.
The bank runs 21 projects in Egypt, including underground stations, power plants beside debts and partnership with some private enterprises, the bank added on its website.
“Approving Egypt as a country of operations will enhance the bank’s activities, investment and infrastructure projects in Egypt,” Bayoumy added.
He reiterated the EBRD’s decision will improve Egypt’s credit ranking, open new sources for finance with easier conditions, and reduce the borrowing costs, which will all help mitigate the burdens on the Egyptian struggling economy.
Al-Fiqqy, who is also economics professor at Cairo University, agreed that giving Egypt “the country of operations” status means that Egypt managed to restore the European bank’s trust by its adherence to democracy track and economic reforms.
Egypt’s growth rate has reached 4.2 percent last year instead of 2 percent in the previous years, he added.
Accomplishing the New Suez Canal in one year has regained trust of the world economic institutions in the Egyptian economy, added al-Fiqqy.
Moreover, Egypt’s openness to new African and Asian partners, expansion of its foreign ties with new world players, and its commitment to the democratic path: starting with drafting the constitution, holding the presidential elections and ongoing preparations for the parliamentary elections, all are factors that have added much confidence into the county’s administration, he added.
He pointed out that the decision will facilitate trade operations, as the bank will give the Egyptian importers “three to six months of grace period,” and pays instead for any foreign exporter.
The bank could also offer sufficient guarantees or work as “guarantor” when the Egyptian government enters partnerships with foreign sides.
He also added that “the decision has positive impact on Egypt.”
Immediately after the bank’s approval, Egypt has witnessed improvement in the World Competiveness Report, ranking 116 from 119 last year, though its slight progress, but it’s an indicator that “the Egyptian ailing economy is recovering after two uprisings with four years of troubles,” he mentioned. Enditem