The negotiations between Egypt’s Suez Canal Authority (SCA) and a group of Gulf lenders for a $500m-$750m loan have stalled, as the Arab world’s most populous nation struggles to resolve foreign currency issues.

The SCA was looking to raise a facility to fund several schemes around the waterway, according to two sources familiar with the matter.

The negotiations have stalled amid Egypt’s shortage of foreign currency, with international banks unsure of the availability of foreign currency in the country.

“It’s fair to say negotiations have stalled because of the currency issues,” says one of the sources. Negotiations with international banks are likely to restart next year as the central bank’s foreign currency policies are expected to become clearer.

The SCA may now have to secure financing from the local banks, one of the sources said. The authority is already in negotiations with some of Egypt’s financial institutions, led by Banque Misr, to raise an equivalent of $300m in Egyptian pounds, says the source.

A spokesperson from the authority refused to comment when asked about the matter. 

It is understood the SCA was looking for financing to service existing debt, continue ongoing overhauling maintenance requirements, and use the money for schemes surrounding the proposed industrial and logistics areas, the Suez Canal Zone (SCZone).

In March this year, the authority finalised a $450m short-term loan with local banks to support related works surrounding the expansion of the new Suez Canal, which was completed in August this year.