Egypt, Tunisia to get six billion dollars from World Bank

Egypt, Tunisia to get six billion dollars from World Bank

Egypt and Tunisia are to receive 6 billion dollars from the World Bank aimed at bolstering the Arab democratic revolutions.

Out of the amount, Egypt, will receive 4.5 billion dollars for over two year from the IMF as Qatar has also offered to make up to 10 billion dollars in investments in the country.

It comes after the European Bank for Reconstruction and Development - set up to aid post-Communist Eastern Europe.

Egypt and Morocco had already applied to the EBRD for financial assistance.
But while the lender said it hoped eventually to provide up to 2.5 billion 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

Robert Zoellick, World Bank president was quoted as saying “our support, and that of others, can sustain momentum and accelerate progress, but only if coupled with real reform," said 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 1.5 billion dollars from the international lender, of which 500 million dollars is part of a previously-announced 1.2 billion dollars package put together with the African Development Bank and European donors.

Egypt's finances

• 10 billion dollars n expected funding shortfall in 2011-12
• 4.5 billion dollars new loans from the World Bank over two years
• 1.2 billion dollars in existing World Bank support
• 1 billion dollars debt forgiveness by US, plus 1 billion dollars loan guarantees
• 4 billion dollars aid package from Saudi Arabia
• 10 billion dollars investments from Qatar
• Multi-billion dollar loans from the IMF to be agreed

Two tranches of one billion dollars, 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 said earlier this month.

The country expects to run a deficit of 9-10 percent of economic output in the coming year and faces a financing gap of 10-12 billion dollars, 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 10 billion dollars 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.

The US said it would cancel one billion dollars in debts and provide a further one billion in loan guarantees to support infrastructure finance.

Meanwhile, Saudi Arabia has offered a four billion dollars aid pack.

BBC/Qasim