Egypt Independent

US forgives US$1 billion of Egypt’s debts

The US will cancel an estimated US$1billion of Egypt's debts, the Washington Post reported on Sunday.

The paper described the decision as the bravest the Obama administration has taken to support an important US ally in the Middle East undergoing a democratic transformation. It said the decision is part of a bundle of economic aid, which also includes commercial and investment-related incentives that seek to restore stability following the 25 January revolution that ousted president Hosni Mubarak.

Barack Obama's attention is focused on the developments in Syria and Libya, the Post went on, but Egypt is considered "more important" than ever for US interests.

The paper said that Egypt, home to a quarter of the Arab world's population, is capable of becoming a democratic model in the region, but if it fails to become a democracy, it may turn into a center of turmoil and extremism. A senior US official told the paper that economic assistance to Egypt and Tunisia is an essential part of bolstering the democratic transition in both countries, and that US officials are working to formulate policies to that end.

The paper cited the International Monetary Fund as saying that the peaceful revolutions in Egypt and Tunisia have taken their toll on their economies as tourism declined and interest rates soared.

Growth rates are expected to dip 4 percent from last year, and pressure to create jobs is mounting.

Since the start of the revolution, the US has given Egypt US$150 million in economic assistance and Tunisia US$20 million.

Translated from the Arabic Edition