The transformation of debts into projects is one mechanism further promoting French projects in Egypt. Mona El-Fiqi reports France has traditionally participated in Egypt's development by funding various important projects such as the first phase of the underground metro, the Qasr El-Aini Hospital, the information system of the Bibliotheca Alexandrina and the Cairo and Alexandria telephone network. Cooperation received a further boost during French President Jacques Chirac's recent visit to Cairo. To further strengthen economic ties between their two countries, the Egyptian Minister of International Cooperation Fayza Abul-Naga and French Minister of External Trade Christine Lagarde, signed two agreements last week during Chirac's visit. The first agreement launches activities of the Agency for French Development (AFD) in Egypt. The AFD is a French government agency which operates in more than 80 developing countries. The AFD will start its activities in Egypt by funding the second phase of a 40-million euro environmental anti-pollution project. The AFD is also looking into participating in the funding an infrastructure project west of the Delta, in addition to another project that will provide loans to small enterprises. The second agreement activates a programme that exchanges a part of Egypt's debts to France with investment projects. The agreement was originally signed by both sides in 1999 but was not put into effect. The debt-exchange programme approves the exchange of 45 million euros of Egypt's debts to France to establish French direct investments projects in Egypt. According to the agreement, a French investor can buy a portion of Egypt's debts to France from the French government and be provided with a 45 per cent discount after obtaining the approval of the Egyptian government to establish a new project. The Egyptian government then pays the value of the debt to the French investor in Egyptian pounds, after which he can start his project. The French Ministry of Finance will help promote the agreement among French investors. Abul- Naga said in a press conference that the agreement will encourage French investors by providing them with a substantial discount coupled with the difference arising from the exchange rate. She added that the approval of an exchange programme to transform Egypt's debts into investment projects reflects the confidence of the European countries in the Egyptian economy's ability to absorb regional as well as local shocks. The principle of exchanging a portion of Egypt's debts with investment projects was previously applied in an agreement with Italy. The two countries agreed to exchange 10 per cent of Egypt's debts to Italy, a sum amounting to 14 million euros out of a total of 49 million euros. By virtue of this agreement a project was undertaken which established the Ministry of Communication and Technology in 1999. Prior to this the communications sector had been managed by the National Telecommunication Organisation (NTO). As a part of the debt- exchange agreement between Egypt and Italy, the second tranche of Egypt's debts to Italy which stand at 90 million euros will also be exchanged for projects. Foremost amongst these is the green road project which will assist Egyptian agricultural products reach Italian ports within an appropriate time-span and according to EU specifications. Italian ports would then serve as the gateway for Egyptian products to 25 European countries. Abul-Naga said that the Egyptian government is currently negotiating with the USA to apply a similar exchange programme for Egypt's debts. Referring to Egypt's overall foreign debts, Abul-Naga asserted that Egypt is committed to pay its foreign debts, along with their interests, in their due times. "Egypt's borrowing policy is well controlled by its ability to pay between $1.2 billion to $1.5 billion annually," she said. Reports issued by the World Bank and the International Monetary Fund currently classify Egypt as a debt-safe country.
