Saudi Arabia, UAE, Kuwait pumped US$19.5 billion into the Egyptian central bank which enabled French lending institutions to finance Cairo’s Dassault Rafale fighter purchase.
Details of how a cash strapped government of Egyptian President Sisi was able to strike a US$ 6 billion arms package deal with Paris are now emerging in French and Egyptian media reports. A banking source in London contracted by defenseworld.net said this is perhaps the first time an arms deal which resembles a large industrial investment has been worked out.
"Egypt will finance a little over half of the amount, the rest being borrowed from a pool of banks,” a source from within the French defence minister Jean-Yves Le Drian’s delegation which signed the Egyptian deal was quoted as saying by a French newspaper.
According to Les Echos newspaper, the banking pool would consist of a dozen institutions, including Crédit Agricole, Societe Generale and BNP Paribas.
The loan is to be secured by the credit insurer Coface, thus ensuring around 2.5 billion euros in loans which will be guaranteed by the French state, “a new level of insurance in an arms deal,” said Les Echos.
Egypt is to pay the balance 2.5 billion Euros as per delivery schedules of the military hardware. However, the cash strapped Egyptian government would not be able to keep its repayment commitments. Cairo is facing a budget deficit of 17.7% and the growth rate for 2014-2015 is estimated at 3.8% of GDP (as per International Monetary Fund projections) with revenues from tourism, investment and inward remittances plunging to record lows.
This is where Saudi Arabia, UAE, Kuwait come in with their $ 19.5 billion funding to the Egyptian central bank which is expected to narrow the budget deficit to 12.5% of GDP and thus help it keep up to its payment schedule.
France has closed a €5.2 billion ($5
French banks and an insurance company are expected finance the approximate Euro 6 billion required to purchase 24 Dassault Rafale fighters and a DCNS frigate. Half the amount could come from Coface (French Insurance Company for Foreign Trade) and the rest as loan from a consortium of banks, according to a report in Les Echos publication last Friday
Egypt and France are close to signing a 5 to 6 billion Euro contract for the sale of twenty Rafale and two FREMM multi-mission frigates. La Tribune newspaper said on its website today that a French delegation of the Treasury visited Cairo earlier this week to assess the security of Egypt in the event of an agreement with the French manufacturers
Dassault may be signing deals with Egypt and Qatar to sell 12 Rafale fighter jets to each of them within the next two months. Egypt and Qatar could convert their options on 12 additional Rafale fighters each by the end of the year and order 24 aircraft altogether, according to the LaTribune publication
The UAE Armed Forces have signed seven agreements worth Dh3.955 billion ($1
Saudi Arabia will help strengthen the Lebanese army with the delivery of French armament materials: armored vehicles, armed vessels, combat helicopters, ammunition, and communications equipment worth $3 billion. Faced with threats in stability, the Lebanese Army must be modernized, equipped and trained to defend the integrity of this state friend of France, French MoD issued a statement today
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