How much have Kamel Al‑Wazir’s loans cost us?
A few weeks ago, Egypt’s transport minister Kamel Al‑Wazir mounted a spirited defence of the billions borrowed to fund the country’s infrastructure spree. The loans, he insisted, came at a bargain: concessional rates as low as 0.1%. “Even your own brother wouldn’t lend to you like that,” he quipped.
Yet a closer look reveals that not all the financing was quite so fraternal. Several megaprojects were underwritten at commercial rates. Officials say speed was of the essence—and that the projects’ profit-driven nature made them less palatable to development lenders. The result: a patchwork of debt, some cheap, some not, all ambitious.
Where did the high rates come from?
The transport minister was not entirely wrong when he extolled the generosity of Egypt’s infrastructure lenders. From 2014 through the end of 2024, loans for Cairo Metro expansions or upgrades to the national railway network carried interest between 0.25% and 1.7%— low by any standard and typical of institutions with a development mandate, such as the European Investment Bank/EIB and the French Development Agency/AFD.
But not all projects were financed so charitably. The interest on the high‑speed rail network loan, which involved commercial lenders, reached 3.07% per year, plus a reference commercial spread of 0.125% annually. The monorail loan agreement pegged interest to Euribor, the euro interbank offered rate.
A member of the board of the National Authority for Tunnels/NAT revealed to Al Manassa that in 2020 the ministry reached out to international development financiers, around the time the high‑speed rail and the monorail were announced, but the so called “development partners” who had previously backed national projects like the metro, did not offer timely responses to the requested loans.
The source, who asked not to be named, said developmental concessional loan agreements took seven to 10 years of talks to conclude. The ministry was not prepared to wait that long to complete the major transport projects.
For example, the Japan International Cooperation Agency/JICA was approached in 2012 to finance Metro Line 4, yet actual implementation began in October 2021, according to a second board member at the NAT responsible for the project, who also requested anonymity.
The first source added that the size of the loans needed for these mega projects was also an obstacle. The monorail (the 6 October City and New Administrative Capital lines) and the high‑speed rail required finance exceeding 4 billion euros, while development institutions typically extend smaller loans. “These institutions take a lot of time to arrange a concessional loan that is usually between 200 and 400 million euros at most,” he said.
| Project | Funder | Loan amount (millions) | Interest rate |
| Phase 1 and 2 of electric light railway | Export‑Import Bank of China | $1,200 | 2% |
| Fast electric train - line 1 | 18 international institutions | €2,260 | 3.07% |
| Monorail - New Administrative Capital to 6 October city | J.P. Morgan Europe Ltd. and J.P. Morgan Chase N.A., London Branch | €1,885 | Euribor spot rate |
| Alexandria Metro | The French Development Agency; Asian Infrastructure Investment Bank; EBRD; EIB | €1,500 | 0.25% |
| Cairo Metro line 4 | Japan International Cooperation Agency | €1,200 | 0.1% |
| Upgrade to Tanta - Mansoura - Damietta line | European Investment Bank | €221 | 1.098% |
| Cairo Alexandria trade logistics development project | World Bank | $400 | 0.25% |
| Provision of 7 luxury sleeper trains from Talgo | Spanish Export Credit Agency | €200 | 0.15% |
| Updating signalling system, Nag Hammadi - Luxor line | Economic Development Cooperation Fund (EDCF) of Korea | $114.9 | 0.15% |
| Updating Luxor - High Dam line | EDCF of Korea | $251 | 1.7% |
A third factor hindering low-interest financing was the nature of the projects themselves, which fall outside the funding remit of development institutions. According to the NAT board member, the high‑speed electric rail is classified as a commercial project expected to generate revenue by transporting freight from Red Sea ports to counterparts on the Mediterranean.
The source said that despite the higher interest rates, these projects stand out for their revenue potential. “Preliminary studies on passenger numbers and freight volumes for the Alamein–Ain Sokhna high‑speed line indicate that operating costs and interest payments will be covered in the first five years. In the following five years, profits should allow repayment of interest and principal on the core debt,” he said.
The New Capital’s train: a relatively moderate rate
The Transport Ministry did not completely surrender when it came to high interest rates. It has at times negotiated them down, as happened with the loan for the New Administrative Capital’s light rail, according to a third member of the NAT board, who also preferred not to be named.
The source said the Export‑Import Bank of China/EXIM, which is financing the light railway, initially offered project loans at 5%, but after intensive talks the rate was cut to 2%, with repayment over 13 years following a grace period of up to five years and a three‑year disbursement period. That rate is slightly higher than development loans but better than commercial borrowing.
“When we started work on phases one and two of the light rail project in 2018, dollar‑denominated loan rates from local banks were above 5 or 6% with no grace period, but thanks to negotiations with China, we secured the required financing on better terms,” the source said.
He also highlighted the role of the grace period in easing the debt burden. “We built and completed the train and put it into service while we still had time before repayment began. Studies at the time also confirmed that external financing was preferable to domestic borrowing because of the scarcity of hard currency.”
In July 2022, the ministry inaugurated phases one and two of the electric light railway, stretching 68 kilometers. They were executed with a $1.2 billion loan from China’s EXIM Bank. More recently, the NAT obtained a loan of about $322 million from the same bank to support phase three.
According to the source, the loan for phase three carries a 2% annual interest rate, and the same terms are expected to apply to financing for phases four and five, which the authority is currently negotiating with the same Chinese bank.
Was it really a good deal?
For economist Mohamed Ramadan, focusing solely on interest rates is insufficient to assess financing risks. More important is the sheer size of the funding, which has piled billions onto Egypt’s liabilities in recent years.
“External borrowing typically places heavy pressure on the domestic economy, and its long‑term risks grow given the Egyptian economy’s limited sources of foreign currency,” Ramadan told Al Manassa.
Egypt’s external debt grew sharply over the last decade, the period in which financing agreements for major national projects proliferated. It rose in value from $41.7 billion in 2014 to $168 billion in 2023, before easing by a few billion thanks to the Ras El‑Hekma deal.
Not everyone is convinced that Egypt’s transport spree is worth the mounting bill. Maye Kabil, a researcher on economic and social rights at the Egyptian Initiative for Personal Rights (EIPR), said piling up loans to fund national projects may be acceptable if they benefit the broadest possible segment of society—a criterion that many of the major transport projects do not meet.
Kabil argued that the issue with successive external borrowing is that the government directed it to projects that are not developmental priorities for the majority. “It would have been better to channel funds into sectors that bring in foreign currency like industry or agriculture, for example, and raise GDP,” she said. The problem is not the borrowing itself, but its destination. Loans that enhance human development through education, healthcare or productive enterprise can yield long-term dividends, But flashy infrastructure with limited reach risks becoming a fiscal burden.
“Directing funds to transport projects that primarily serve a limited segment of the population and do not align with priorities will inevitably carry heavy negative effects,” Kabil said, noting that although interest rates on many government loans are low, the country still suffers from high debt‑service costs, which reached $32.9 billion in 2024.
The EIPR researcher stressed that the problems of large‑scale borrowing have come into sharp relief in the economic crisis of the last two years. Repayment dates fell due, and the government lacked sufficient hard currency, forcing it to borrow again from international institutions like the IMF under onerous conditions that hurt the economy as a whole.
The Transport Ministry may have been an effective negotiator in easing the interest burden on some loans, she said, but it was compelled to borrow at commercial rates in many other cases. That, Kabil warned, makes it essential to subject financing agreements to broad public debate before they are signed, given their negative consequences for society at large.