Last updated: 2 February, 2012

Egypt asks World Bank for $1 bn loan for economy

Egypt has asked the World Bank for a $1.0 billion loan to help it rebuild its economy, the Bank said Thursday.

The Bank said it had received an official request from Cairo for a development policy loan, and that it would open discussions now to “work out the details.”

Last month Egypt entered discussions with the International Monetary Fund for a separate financing, reportedly as much as $3.2 billion, to help it bridge fiscal shortfalls as it attempts to recover from the political upheaval of the past year.

After the overthrow of longtime strongman president Husni Mubarak in February 2011, continued turmoil on the streets resulted in wiping out much of the country’s all-important tourism earnings and damaging other business sectors as well.

But the country, apparently uncomfortable with the tough conditions that could come with it, avoided seeking financing from the two Washington-based lenders.

After a visit to Egypt by an IMF team in January, the Fund said Cairo was seeking to build a political consensus to accept a much-needed IMF support program.

“Egypt’s economy, despite its solid and sound fundamentals, is facing a number of difficult challenges, which have to be addressed through an economic program that safeguards macroeconomic stability and creates conditions for a strong recovery,” IMF Middle East director Masood Ahmed said on January 18.

“The program developed by the Egyptian authorities and its key policies are currently being discussed with emerging political parties to ensure broad political support,” he said in a statement.

“This should help reduce uncertainty and boost confidence in the program’s successful implementation.”