President Abdel Fattah El-Sisi’s ratification of an agreement establishing the New Development Bank (NDB), of the BRICS bloc, was published in Egypt’s Official Gazette on Thursday, 30 March.
This comes after Egypt’s Cabinet approved plans for Egypt to join the NDB — a multilateral lender set up by Brazil, Russia, India, China and South Africa — last December, to boost Egypt’s access to finance.
What is the purpose of NDB?
The NDB aims to bridge the gap between the growing finance needs of emerging and developing economies and the availability of finance in the global financial system. Accordingly, this will facilitate the process for emerging economies to have greater access to finance and more leverage in global development finance.
By providing an alternative to the World Bank (WB) and the International Monetary Fund (IMF), the NDB also promotes further economic cooperation between emerging and developing economies to accelerate the pace of development.
How does it operate?
With a capital of 100 billion USD (3,090,444,400.00 EGP), member states of the NDB finance projects in their economies as well as other economies. The development bank is structured by distributing equal shares among its founders, with each having 20 percent of the total.
How will this affect Egypt’s economy?
In light of Egypt’s recent economic crisis, there is an urgency for finance that cannot be sufficiently met. Fitch ratings — an American credit rating agency — forecasts Egypt’s external financing needs for FY23 and FY24 will reach at least USD19 billion (587 billion EGP) and USD 22 billion (679 billion EGP).
Soaring inflation and a severely weakened currency has deepened Egypt’s economic crisis, leading many to cut back on life’s basic essentials. Many Egyptians have expressed frustration at the economic struggles the country is facing.