Egypt’s Minister of International Cooperation Rania Al-Mashat chaired, on Wednesday, the third meeting of the national technical, legislative, and legal committee to study the country’s action plan regarding the international financial institutions’ (IFIs) decision to discontinue using the London Interbank Offer Rate (LIBOR) as a benchmark for setting interest rates after 2021.
The LIBOR has been widely used since the 1970s as a reference rate for various financial instruments.
The committee, formed by the Prime Minister, aims to discuss the government’s measure to phase out of LIBOR in 2021, in a way that ensures a smooth transition and fulfils the interests of the Egyptian state. The committee includes representatives from the Central Bank of Egypt (CBE), the Cabinet, and the World Bank.
This is to follow up on an initiative presented by the World Bank to stop using LIBOR starting January 2022, as well as to study the efforts of other IFIs, namely the African Development Bank (AfDB), the Asian Infrastructure Investment Bank (AIIB), and the OPEC Fund for International Development, in the same context.
Al-Mashat began the meeting by applauding the efforts made by the technical, legal, and legislative working groups regarding the World Bank’s initiative to stop using LIBOR.
The Minister added that the committee is keen to continue its coordination between all relevant entities in an institutional manner, and to study all technical and legal aspects to achieve a smooth transition from LIBOR in a way that serves Egypt’s interests.
Al-Mashat indicated that in light of the efforts of international institutions to leave behind LIBOR, initiated by the World Bank and its member states, alongside AfDB, AIIB, and OPEC, the Ministry is studying the steps to transition away from LIBOR, within the national committee formed by Prime Minister Mostafa Madbouly, in a way that enhances multilateral cooperation.
The Minister added that the steps being taken to transition constitute a reference for negotiations that will take place with other financing institutions as well, stressing the need for the international community to restructure international programs that are priced as per LIBOR, so that the global community can corroborate on the transition.
The World Bank participated in the committee’s first meeting, which was held at the beginning of this year, and presented its initiative on the transition away from LIBOR. This presentation included the importance of working with an alternative reference rate that achieves the interests of the international community.
During the World Bank’s annual meetings last October, Al-Mashat took part in a virtual session titled “Beyond LIBOR… Are We Ready?”, where the Minister emphasized the need for the international community and IFIs to agree on a new benchmark interest rate, with a clear vision to encompass the interests of all stakeholders.
