China to lend Egypt central bank US$1b during president's visit: ambassador

[CAIRO] China is expected to lend Egypt's central bank US$1 billion to help shore up its foreign reserves during a visit by the Chinese president this week, Egypt's ambassador to Beijing said in comments to the official MENA news agency late on Sunday.

Egypt is battling to overcome an acute dollar shortage with a raft of rules aimed at cutting back imports and thereby reducing demand for hard currency.

Chinese President Xi Jinping will arrive later this week, and the two countries are expected to discuss potential Chinese investments in an array of Egyptian projects including one to build a new administrative capital.

Egypt's ambassador to Beijing, Magdi Amer, said China was also due to sign a US$700 million agreement with the state-owned National Bank of Egypt to provide a line of credit to finance future projects as well as a US$100 million loan agreement with Banque Misr aimed at financing small and medium-seized projects.

Egypt's central bank has faced strong pressure to devalue the currency in line with other emerging markets but has continued to defend it despite dwindling foreign reserves.

Foreign reserves in Egypt have fallen to US$16.445 billion in December from around US$36 billion before the 2011 uprising ushered in a period of turmoil, which scared off foreign investors and tourists - key sources of hard currency.

The Chinese leader is visiting Egypt as part of a regional tour that will also take in Gulf rivals Saudi Arabia and Iran.

REUTERS