Egypt applies to join BRICS alliance + negotiates credit line with India as it looks to boost non-USD trade

Egypt has submitted an application to join the BRICS alliance, Russian ambassador to EgyptGeorgy Borisenko told Russian news agency TASS. The alliance is currently focused on shifting trade to alternative currencies, whether it be national currencies or a new common currency. “Egypt is very much interested in that,” he said.

BRICS members are also considering the creation of a common currency. Egypt and Russia have been working together to reduce the use of the USDs in their bilateral trade in favor of the RUB. “New payment mechanisms are being created for trade transactions,” Borisenko stated.

Egypt is not the only country interested: Nearly 20 countries, including Saudi Arabia, Iran, Argentina, the UAE, Algeria, Bahrain, and Indonesia, have recently expressed interest in joining the BRICS alliance, according to Bloomberg.

ICYMI- Earlier this year, Egypt became a member of the BRICS’ New Development Bank (NDB), a USD 100 bn multilateral lender that invests in infrastructure projects in member countries.

Barter + non-USD trade also on the negotiation table with India: Egypt could start bartering goods such as fertilizer and natural gas with India under a wider set of trade arrangements expected to be announced when Indian PM Narendra Modi visits Egypt later this month, Reuters reports, citing sources it says are familiar with the matter.

Talks of a credit line continue: The proposal is part of a wider deal that could see New Delhi extend a credit line worth “several bn USD” to help Egypt pay for imports. “The agreement would allow Egypt to make purchases in INR and bartering is being considered as a means to settle this debt through the sale of Egyptian products that might be of use for India,” one of the newswire’s sources reportedly said. Reports of the credit line surfaced earlier this month when Bloomberg quoted Egyptian Supply Minister Ali El Moselhy as saying that India would provide the country with a loan of unspecified value. The minister later told Reuters that “nothing of the sort has been implemented.”

Wheat not part of the plan? While Egypt has expressed interest in using the facility to import wheat — among other supplies — from India, the country’s wheat export ban makes this an unlikely trade, an Indian official told Reuters. India — the world’s second largest wheat producer — banned wheat exports in May 2022 to help rein in local prices.

It’s all still up in the air: “It’s a negotiation. Which companies will be involved and in which commodities? All of that is still in discussion,” El Moselhy told Reuters. “There are a lot of discussions but up until now the model is not defined.”

A lifeline amid an FX crunch: The agreement would allow Egypt to pay for imports from India without needing hard currency. The prolonged FX shortage triggered by the war in Ukraine and tighter US monetary policy has made it harder for the government to pay for imports. The supply minister and traders told Reuters last month that the crisis had forced state grains supplier GASC to delay opening letters of credit to pay for wheat imports.