Egypt gets US$1 bn from Saudis, clearing IMF hurdle

Egypt gets US$1 bn from Saudis, clearing IMF hurdle

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Thu, 10/05/2012 - 15:21

Saudi Arabia has transferred US$1 billion to Egypt's central bank, an Egyptian minister said on Thursday, in a move seen as helping Cairo secure a $3.2 billion loan from the IMF.

Egypt has asked the International Monetary Fund (IMF) and other donors for loans to help it plug a balance of payments deficit aggravated by the political and economic turmoil of the last 15 months.

Last year's uprising chased away tourists and foreign investors, two of Egypt's main sources of foreign currency, and economists say the country will need a minimum of $11 billion over the next year to stave off a balance of payments crisis and a potential devaluation of its currency.

Before it agrees to the loan, the IMF has told Egypt to come up with an economic program that has broad domestic political support and to line up additional resources from international donors.

In a statement, International Cooperation and Planning Minister Fayza Abouelnaga said the Saudi funds had been deposited with the central bank for eight years and that "coordination was ongoing" with Saudi Arabia about remaining elements of a $2.7 billion aid package first broached with Riyadh a year ago.

The Saudi package also includes $500 million of support for development projects, $250 million to finance purchases of petroleum products and $200 million of support for small and medium-sized enterprises.

An Egyptian official said last month Saudi Arabia had agreed to transfer all the funds by the end of April. But a week later Riyadh recalled its ambassador in a rare diplomatic row over street protests in Cairo against the arrest of an Egyptian lawyer in Saudi Arabia.

A year ago, Egypt said Saudi Arabia and other Gulf Arab states had pledged billions of dollars in support, but only $1 billion actually arrived at the time, with Saudi Arabia and Qatar sending $500 million each.