Turkey talks tough with Egypt
Turkey’s loan to Egypt is contingent upon Egypt including Turkish companies in infrastructure projects and providing the Turkish government with expenditure reports, an anonymous source has revealed to Daily News Egypt.
The terms and conditions attached to Turkey’s $1 billion loan to Egypt stipulate that the loan will be granted in two installments of $500 million each, the first having already been granted at the end of October, with the second be given on 30 January 2013.
The loan is to mature in five years with a three-year grace period. Egypt is to settle the loan in five semi-annual installments of $200 million, starting October 2015 until October 2017. Egypt is to pay the interest on the loan every six months, starting six months after receiving the first half of the loan in October 2012.
The two countries agreed that interest on the loan would be in sync with that determined by the British Libor rate of six-month maturity. The fine for a delay in settlements of installments is one per cent to be paid annually.
According to the agreed-upon conditions, the loan will be used to fund infrastructure projects throughout Egypt. The government was asked to guarantee the participation of Turkish companies in the implementation of public sector investment projects as it has done in previous years.
The government is also required to present expenditure reports to the Turkish side upon request for every installment of the loan.
In case of failure to adhere to the conditions of the loan, Turkey has the right to suspend or cancel the loan and demand immediate settlement of the outstanding balance. Immediate settlement can also be demanded if any law or judicial decree is passed in Egypt that conflicts with the conditions of the loan.
The two sides agreed to seek legal arbitration in the event of any disagreement, which was agreed would take place in Istanbul.