São Paulo – This Thursday (2nd), the World Bank announced that it received a US$ 1 billion loan request from Egypt. According to a statement issued by the institution, the government will funds will be used by the government to “support its economic program.” The World Bank informed that the sum has been requested as a “development policy loan.”
According to the World Bank vice president for the Middle East and North Africa, Inger Andersen, the institution will “open discussions” with local authorities to work out the details of the loan. This is not the first request made by Egypt to international organizations this year. On January 16th, a delegation of the International Monetary Fund (IMF) is the first request made by Egypt to international organizations this year. On January 16th, a delegation from the International Monetary Fund (FMI) arrived at the country to negotiate a US$ 3.2 billion loan.
The agreement with the Fund has not been signed yet, and may take a few more days to come through. Egypt needs the money to finance its budget deficit, replenish its foreign exchange reserves, curb inflation and stop the Egyptian pound from depreciating.
In June 2011, the IMF had offered US$ 3 billion to the country, which turned the loan down because the military government which took office after dictator Hosni Mubarak was overthrown did not want to contract a debt that would be left over to the next president. Negotiations were resumed when the initial phases of the Parliamentary elections started.
On January 17th, the Egyptian government and the World Bank announced another agreement, under which the Bank will loan US$ 200 million for the Egyptian Ministry of Housing to carry out water supply and sanitation projects.
In addition to the financial institutions, different countries have offered loans to Egypt. Saudi Arabia and Qatar have loaned US$ 500 million each. The European Union announced last Thursday (2nd) that it intends to allocate 500 million euros to the country, but only after negotiations with the IMF are over. Egypt should also request a US$ 500 million loan to the African Development Bank.
*Translated by Gabriel Pomerancblum
