Egypt and China Forge Strategic Debt Exchange Partnership for Mutual Development

The Minister of International Cooperation, Dr. Rania Al Mashat, stated that the signing of a memorandum of understanding ( MOU) in the field of debt exchange between the Ministry of International Cooperation and  China International Development Cooperation Agency reflects the strength of the shared relations between the two countries, rooted in historical friendship. She emphasized the development of joint efforts under President Abdel Fattah El-Sisi's leadership to achieve mutual development and benefit from China's experience in development.

Egypt has extensive experience in debt exchange dating back to the 2000s with Germany and Italy, and it is the first country to sign a debt exchange agreement with the Chinese International Development Cooperation Agency, diversifying financing mechanisms through innovative tools. This agreement signifies mutual cooperation and economic ties, promoting mutual benefit and enhancing the strategic partnership between the two nations.

During his visit to China to participate in the Belt and Road Forum, Prime Minister Dr. Mostafa Madbouly witnessed the signing of a memorandum of understanding in the field of debt exchange for development between the Ministry of International Cooperation and China International Development Cooperation Agency. MOU was signed by Dr. Rania Al-Mashat, Minister of International Cooperation, and Luo Zhao Hui, President of China International Development Cooperation Agency.

MOU, signed in the desire of both parties to explore new avenues and areas of cooperation, reflects their commitment to strengthening cooperative ties based on the principle of mutual benefit. The economic relations between the two countries serve as an effective model for South-South cooperation.

Al-Mashat highlighted that this MOU marks the first of its kind executed by China International Development Cooperation Agency with a friendly nation, demonstrating the depth of the bond between the two countries and confirming the continuous evolution of their shared relations since the signing of the comprehensive partnership agreement between their leaders in 2014 during President Abdel Fattah El-Sisi's visit to Beijing.

The government adheres to governance rules and precise management of debt exchange programs within the framework of international cooperation and development financing to maximize the benefits from these programs. The debt exchange program with the Chinese International Development Cooperation Agency reflects efforts to diversify the financing structure, enhance development initiatives, and address climate issues in collaboration with bilateral development partners.

The Ministry of International Cooperation, in line with the presidential directives to strengthen Egyptian-Chinese relations, conducted successive rounds of talks with the Chinese side in various forums. This included Minister Al-Mashat's visit to Beijing in July last year for high-level meetings of the International Forum for Development. Bilateral meetings were also held with Chinese financial institutions and government officials during the annual meetings of African Development Bank and the Asian Infrastructure Investment Bank in Sharm El-Sheikh.

Since February, the Ministry of International Cooperation, in coordination with relevant national entities, has conducted intensive coordination meetings with the Chinese side to establish a unique experience between the Ministry of International Cooperation and the Chinese International Development Cooperation Agency for formulating a debt exchange agreement for development.

During Minister Al-Mashat's visit to China in July last year, negotiations on the debt exchange program were continued, and a memorandum of understanding on the "Global Development Initiative (GDI)" was signed with the Chinese International Development Cooperation Agency.

The memorandum of understanding strengthens Egyptian-Chinese partnership and includes the establishment of a mechanism for consultations at the administrative level. It also involves formulating a comprehensive strategy for developmental cooperation between Egypt and China for 3-5 years for the first time, considering the shared relations between the two countries. This strategy encompasses areas and projects to be implemented through the developmental cooperation program.

Throughout August and September, intensive coordination meetings were held with relevant national entities to discuss national priorities within the framework of the debt exchange program. This was before its signing during the visit of Prime Minister Dr. Mostafa Madbouly to China this October.

Minister Al-Mashat affirmed the continuation of coordination with the Chinese side and relevant national entities to implement the debt exchange agreement, enhancing joint development efforts and bolstering Egyptian-Chinese relations, solidifying Egypt's leadership in achieving development goals.

Debt exchange mechanisms serve as a means to enhance available funding for developmental projects by signing agreements to exchange a portion of debts owed by partner developing countries. The goal is to alleviate the burden of external debts and achieve sustainable development by financing priority projects, supporting efforts to achieve the seventeenth Sustainable Development Goal, "Partnerships for the Goals." According to the mechanism, debts are repaid in local currency to finance agreed-upon development projects between the parties.