• Suez Canal short-term revenues unclear
  • Immediate impact of canal expansion unlikely to be felt

Analysts have suggested that the economic impact of the waterway’s expansion is difficult to project, with any estimates suggesting that revenues are unlikely to significantly increase for at least four years.

The Suez Canal Authority faces high interest payments and principle payments within four years, says Angus Blair, president of the Cairo-based Signet Institute.

The project was funded by selling investment certificates that have a 12 per cent interest rate. The certificates pay quarterly dividends with the principle balance due in four years.

“While the expansion will mean more ships can pass through the canal, revenues will be dependent on global trade and European demand rather than the ability to ease ships through, further to this the authroities have a lot of payments to make in the next few years, which will dampen any increased revenue,” says Blair.

The new Suez Canal expansion is set to be officially opened on 6 August and, with several other port projects currently in the pipeline, the canal is set to be the government’s focus, despite a lack of projected revenue increases in the short term.

Egypt hopes the canal authority will increase its annual revenue from $5.3bn in 2015 to $13.2bn in 2023.

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