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Falling oil prices and tight credit markets have created a ‘perfect storm’ for many of the small independents active in the Egyptian upstream, as well as that of nearby Tunisia. Multilateral financers have stepped into the breach.
Multilateral financers such as the European Bank for Reconstruction and Development (EBRD), the World Bank’s International Finance Corporation (IFC), the IMF’s MIGA and the Islamic Development Bank (IDB) are able to offer more attractive terms than local Egyptian banks: lower interest rates, loans with longer maturity, and cash in $US rather than local currency. The Central Bank of Egypt (CBE) prohibits local banks from extending dollar-denominated financing to companies whose revenue is not in dollars. Even if the CBE was to relax these regulations, longer term dollar loans are not very common in the local market, usually lasting between seven and eight years, which is not sufficient for infrastructure projects that typically require more than 15 years in some cases.
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