Cairo – Mubasher: The Minister of International Cooperation, Rania El-Mashat, chaired the second meeting of the National Technical, Legislative, and Legal Committee, formed by Prime Minister Mostafa Madbouly No. 2264 of 2020, to study the Egyptian government’s action plan regarding the transformation of international financing institutions from operating at the benchmark interest rate (Libor) by the end of 2021.
During the meeting, an initiative presented by the World Bank was studied by committee members, Jihan Saleh and Ahmed Abu El-Dahab; advisors from the Cabinet; representatives from the Ministries of Finance, Planning and Economic Development, Foreign Affairs, Legal and Parliamentary Affairs, and International Cooperation; and representatives from the Central Bank of Egypt (CBE), according to a statement on Thursday.
At the beginning of the meeting, El-Mashat thanked the members of the committee and the two technical and legal teams for the effort in studying all aspects of the World Bank’s initiative, and in studying the procedural aspects of shifting away from the benchmark interest rate (LIBOR).
She stressed the importance of the committee’s coordination between relevant national parties to achieve the best possible scenario in transitioning from the benchmark interest rate, as this transition serves both the interests of the government and all the international financial institutions that it collaborates with.
The minister of international cooperation pointed out that the steps being studied by the committee with regards to the World Bank’s initiative in leaving behind the benchmark interest rate (LIBOR) shall be a helpful case study for all international financial institutions who are planning to take the same steps.
This committee focuses on laying down executional steps in the technical and legal spheres, paving the way for the on-ground transformation action plan that shall be presented to the prime minister.
The committee also discussed the results of the discussions that have taken place in December between the technical working group which included the Ministries of Finance and International Cooperation, and the Central Bank of Egypt. The discussions covered how Egypt would benefit from changing the financial conditions of the current funding, the impact of canceling the benchmark interest rate and applying a new rate in terms of the state’s public debt, the availability of alternatives when the current benchmark interest rate would be change, and how the interest rate on development financing would be calculated.
Moreover, the committee addressed the work done by the legal working group which included the Ministries of Foreign Affairs, Legal and Parliamentary Affairs, and International Cooperation, that met last January. They reviewed the amendments to the general conditions and financing agreements related to the World Bank, and determined the legal and legislative measures that would be taken in amending these conditions.
At the end of the meeting, the committee recommended that all the final details, including both the technical and legal teams regarding the World’s Bank initiatives, should be examined, and that a final report detailing the steps of transitioning from the benchmark interest rate (LIBOR) be completed by the end of the month to present to the prime minister.
It is worth noting that the World Bank participated in the committee’s first meeting and had, at the time, presented its initiative to switch from operating at the benchmark interest rate (LIBOR). Their presentation included the importance of operating at an alternative reference rate that would better serve the interests of the international community; as the current global cooperation portfolio of the World Bank, according to the benchmark interest rate (LIBOR), amounts to $400 trillion. So far, 60% of the countries collaborating with the World Bank have signed documents agreeing to leave behind the current benchmark interest rate (LIBOR), such as China, Tunisia, Ukraine, India, Indonesia, Iraq, Romania, and South Africa.
