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Debt swap on hold

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Deal includes projects in the fields of education and employment

Despite meeting German Chancellor Angela Merkel during his visit to Berlin in January, President Morsi was reported as being unable to convince her of the benefit of an Egyptian-German debt swap  AFP Photo / Odd Andersen

Despite meeting German Chancellor Angela Merkel during his visit to Berlin in January, President Morsi was reported as being unable to convince her of the benefit of an Egyptian-German debt swap
AFP Photo / Odd Andersen

Minister of Planning and International Cooperation Ashraf El-Araby denied reports that the German government cancelled the debt swap agreement with Egypt, worth € 240m, that was pledged by Germany in 2011.

The minister was referring to an article published last week in the German magazine Der Spiegel saying  that President Mohamed Morsi failed to convince German Chancellor Angela Merkel of the benefit of cutting Egypt’s debts to Germany through the swap deal.

The agreement is planned to be executed over 3 tranches of equal value.

“The deal is on hold,” said Hans Hamman, development cooperation referent at the German embassy in Cairo. “The first tranche is actually in work while negotiations on the remaining amount were postponed in December because € 30m of the first tranche was not yet spent.”

Hamman added that the deal will cover a school feeding project in cooperation with the World Food Programme (WFP) and the Ministry of Education and a cooperative project between Egypt and Germany for building schools.

The projects covered by the second and third tranches are yet to be defined according to Hamman, though previous discussions state they will focus on the areas of education and employment.

“We are hopeful,” said Hamman, who expressed his wishes that the negotiations will be resumed very quickly after deciding on the remaining € 30m.

Under a debt swap programme, creditor countries may agree to cancel a portion of the debt owed to them, on the condition that the debtor countries invest an agreed-upon amount in local development projects.

 


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