An Egyptian minister said on Thursday Riyadh has transferred much-needed $1bn to Cairo’s central bank, seen by many as a move to help unrest-hit country secure a $3.2bn loan from the IMF.
Egypt has been asking the International Monetary Fund (IMF) and other donors for loans it needs to plug its balance of payments deficit exacerbated by the 15-month-old political and economic turmoil.
Last year’s uprising deprived Egypt two of its main sources of foreign currency – tourists and foreign investors – and left the country in desperate need of a minimum $11bn over the next year to stave off a balance of payments crisis and a potential devaluation of its currency.
The IMF has demanded Egypt to present a sound economic programme before it agrees to the loan and stressed on the need of lining up additional resources for international donors as guarantees.
Planning Minister Faiza Abu el-Naga said in a statement that the Saudi funds had been deposited with the central bank for eight years and that Egypt was “coordinating” with Saudi Arabia to receive the remaining elements of a $2.7bn aid package offered by Riyadh a year ago.
Sources said the Saudi package also includes $500m of support for development projects, $250m to finance purchases of petroleum products and $200m of support for small-and medium-sized enterprises.
An Egyptian official claimed last month that transfer of all Saudi funds would be completed by the end of April.
The loan transfer hit a snag when street protests took place in Cairo against the arrest of an Egyptian lawyer in Saudi Arabia. Riyadh recalled its ambassador in a rare diplomatic spat.
Saudi Arabia and other Gulf Arab states had pledged billions of dollars in support at the onset of Arab uprising, but just $1bn arrived at the time, with Saudi Arabia and Qatar donating $500m each.