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Egypt and Tunisia to get $6bn from World Bank | Egypt and Tunisia to get $6bn from World Bank |
(40 minutes later) | |
The World Bank has pledged $6bn in loans for Egypt and Tunisia in a move explicitly to bolster the Arab Spring. | The World Bank has pledged $6bn in loans for Egypt and Tunisia in a move explicitly to bolster the Arab Spring. |
Egypt, href="http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:22922288~menuPK:34463~pagePK:34370~piPK:34424~theSitePK:4607,00.html" >which will receive $4.5bn over two years, is also speaking to the International Monetary Fund (IMF). | |
Meanwhile, Qatar has offered to make up to $10bn in investments in Egypt. | Meanwhile, Qatar has offered to make up to $10bn in investments in Egypt. |
It comes after the European Bank for Reconstruction and Development - set up to aid post-Communist Eastern Europe - href="http://www.ebrd.com/russian/pages/news/press/2011/110521b.shtml" >said at the weekend it would start lending to emerging Arab democracies. | |
Egypt and Morocco had already applied to the EBRD for financial assistance. | |
But while the lender said it hoped eventually to provide up to 2.5bn euros ($3.5bn) a year to the region, any such wholesale geographic reorientation of its mandate would need the approval of all of its 63 members. | |
Funding gap | |
Like the EBRD, the World Bank explicitly stated its desire to support the Arab Spring of democratic revolutions. | |
"Our support, and that of others, can sustain momentum and accelerate progress, but only if coupled with real reform," said Robert Zoellick, World Bank president. | |
The World Bank money will be made conditional on the countries' progress in modernising their economies. | |
Tunisia - which was the first country to oust its former dictator - will receive $1.5bn from the international lender, of which $500m is part of a previously-announced $1.2bn package put together with the African Development Bank and European donors. | |
Two tranches of $1bn, to be provided directly to the Egyptian government this year and next, would be linked to "governance and openness reforms". | |
The other money would be provided in other formats, such as guarantees, private business loans and infrastructure financing. | |
Egypt's financing needs are daunting, thanks to a collapse in the economy - notably the tourism industry - triggered by the recent political turmoil. | |
Elevated demands of the people after the revolution were adding to pressure on the budget, Finance Minister Samir Radwan told the BBC earlier this month. | |
The country expects to run a deficit of 9-10% of economic output in the coming year and faces a financing gap of $10bn-12bn, which it has already formally applied to the IMF to help plug. | |
Gulf support | |
Qatar's planned investments in Egypt are expected to be consummated during a visit to Egypt by Qatar's emir this Saturday. | |
"I believe these projects, when implemented, will surpass $10bn and they will be productive products in Egypt," said the Qatari ambassador, Saleh al-Buainein. | |
The emirate may also buy up Egyptian government bonds in order to help fund its deficit. | |
It comes after the US and Saudi Arabia offered the new Egyptian government financial support. | |
The US said it would cancel $1bn in debts and provide a further $1bn in loan guarantees to support infrastructure finance. | |
Meanwhile, Saudi Arabia has offered a $4bn aid package. |
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