Egypt’s government will need to consider foreign funding to support its new Suez Canal project, say analysts.

This contradicts current plans to raise the money from investment certificates issued to the Egyptian people.

“At some point of time, you will have to request funding from outside sources by issuing bonds internationally because that will be the only way to finance that project without putting additional drain on local liquidity or the local banking system,” says Wael Ziada, head of research at Egypt’s investment bank EFG Hermes.

The new $4bn canal project, announced by President Abdul Fattah al-Sisi in early August, involves the creation of an additional lane to allow more ships to travel through the waterway.

Initially the government planned to finance the project by allowing Egyptians to buy shares in the development, but it was changed to investment certificates.

Branches of the National Bank of Egypt, Banque Misr and Banque Du Caire, along with the Suez Canal Bank, are now readying to issue these certificates, pending imminent final presidential approval.

Calling upon Egypt’s general population to fund the project is partly a politically fuelled move to garner public support for the scheme by offering them an investment opportunity with attractive returns.

The certificates will carry an interest rate of 12 per cent that will be cashed every three months, backed by Suez Canal revenue with a sovereign guarantee.

The canal expansion is forecast to boost Suez Canal Authority revenues from $5.5bn to more than $13bn over the next four years, according to the Ministry of Finance.

The use of the certificates is also intended to be a way of raising money outside the already-strained local banking sector, as well as limiting the country’s exposure to foreign debt.

The certificates could negatively affect the country’s banks. The interest rates offered on canal certificates may divert large volumes of money away from local bank savings accounts, therefore diluting Egyptian banks’ main funding base.

The canal project will boost the waterway’s revenue by allowing for the uninterrupted transit of ships north and south and permitting the transit of larger ships.

Currently, ships travelling from the north have to berth for a number of hours to wait for the south convoy to pass.

A 2013 report from the Washington-based World Bank found that the canal was providing “meagre returns” for Egypt, and this project is expected to reverse this situation.

Dredging work is scheduled to begin on 1 September and Al-Sisi has called for the digging and dredging to be complete within a year. The army is overseeing the project.

There is an additional Suez project focused on the development of the areas surrounding the canal underway. This will involve the construction of industrial and logistics hubs to support the export operations of Egyptian companies.

In mid-August, the World Bank said it was providing technical advisory services to support the masterplan for the Suez Canal Area Development project.

Foreign and Arab investors will have the opportunity to invest in this project, according to Egypt’s Ministry of Finance.