This proposal is part of a broader agreement that could potentially witness New Delhi extending a substantial credit line to Cairo, amounting to several billion dollars. Insider sources have hinted that an official announcement regarding this arrangement might be made later this month, coinciding with Indian Prime Minister Narendra Modi’s inaugural visit to Egypt.
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India is mulling over a proposition to initiate barter trade, involving goods like fertilizer and gas, with Egypt. This proposal is part of a broader agreement that could potentially witness New Delhi extending a substantial credit line to Cairo, amounting to several billion dollars. Insider sources have hinted that an official announcement regarding this arrangement might be made later this month, coinciding with Indian Prime Minister Narendra Modi’s inaugural visit to Egypt. Egypt is grappling with a persistent shortage of foreign currency, necessitating such measures.
According to a source, this agreement would permit Egypt to make purchases using the Indian rupee, and barter trade is being seriously contemplated as a possible means of settling the debt. The idea is that Egyptian products deemed useful to India could be exchanged to fulfill the payment obligations. In light of this development, India’s foreign ministry is currently in consultation with relevant departments to gauge their interest in acquiring fertilizers and gas from Cairo as partial payment for the credit line, as stated by an Indian official.
The Indian government is particularly interested in diversifying its fertilizer imports, especially in light of the supply constraints experienced in certain Indian states in 2021, owing to export restrictions imposed by China and a notable surge in prices. As part of this facility, Egypt has expressed its desire to acquire wheat supplies and other commodities. However, due to India’s ban on wheat exports and its decision to rescind a planned shipment of 3 million tons of wheat to Egypt in the 2022/23 fiscal year, it seems unlikely that wheat will be included in the trade. Notably, Egypt currently relies heavily on Russia for its wheat needs.
Egypt’s Supply Minister, Ali Moselhy, shed some light on the ongoing discussions, stating that negotiations are still underway regarding the involvement of specific companies and the choice of commodities. He did not disclose the potential size of the credit line under consideration. It is worth mentioning that in the previous fiscal year, India exported goods worth $4.11 billion to Egypt, while importing goods worth $1.95 billion.
Egypt has been deferring payments for its substantial wheat purchases, occasionally for several months, due to a shortage of funds. The country is striving to stabilize its economy, which has been significantly impacted by the COVID-19 pandemic and soaring commodity prices, resulting in a withdrawal of approximately $20 billion by foreign investors from its financial markets.
