A report by the House's Economic Affairs Committee said the loan agreement will help the Egyptian General Petroleum Organisation (EGPO) and the General Authority for Supply Commodities (GASC) import the country's needs of basic food commodities, particularly wheat, and petroleum products.
The report added that the agreement, signed in January 2018, originally stated that the International Islamic Trade Finance Corporation would give EGPO and GASC $3 billion. The agreement, however, was modified in June 2022 to raise the loan to $6 billion.
"The loan was increased due to the Russia-Ukraine war, which led to a hike in the international prices of wheat, fuel products, and oil derivatives," said the report.
The report noted that Egypt has had a long, successful relationship with the International Islamic Trade Finance Corporation since 2008. The corporation has since been keen to give Egypt all the financial support it needs to bolster its internal economic conditions," said the report.
MP Hossam Awad, the chair of the House's Energy Committee, said the $6 billion loan comes at the right time to help Egypt contain the dramatic rise in international food commodities, particularly wheat, due to the war in Ukraine.
"The loan amount of $3 billion was just enough in 2018, but after the war erupted in Ukraine in February, the government was able to reach a new agreement to raise the loan to $6 billion to help the country absorb the shock of the global food crisis triggered by the war," said Awad.
Egypt, the world's number one importer of wheat, used to rely on Russia and Ukraine for 80 percent of its imported wheat and has recently been working on diversifying its wheat import sources and encouraging local farmers to sell their wheat to the state since the Ukraine crisis started in February.
The country has already increased its local supplies, buying from local farmers at EGP 880 per ardeb (150kg) on average, which will be upped to EGP 1,000 in the new season.
Egypt has announced that the 2022 wheat supply season from local farmers secured 4.2 million tons, up from 3.5 tons in 2021.
The country consumes around 18 million tons of wheat annually, according to Supply Minister Ali Moselhi.