Saudi Arabia approves $430 mln in new aid to Egypt

Fri Jun 8, 2012 4:02pm GMT

CAIRO, June 8 (Reuters) - Saudi Arabia said on Friday it had approved $430 million in project aid to Egypt and would allow Cairo to use a $750 million line of credit to import oil products.

The aid, to be provided by the Saudi Fund for Development, is part of a package that Saudi Arabia announced a year ago to support the country's cash-strapped economy in the wake of an uprising that ousted President Hosni Mubarak.

The uprising chased away tourists and foreign investors, two of Egypt's main sources of foreign currency, and economists have said the country will need a minimum of $11 billion over the next year to stave off a balance of payments crisis and a potential devaluation of its currency.

Saudi Arabia, concerned that the turmoil in the Middle East may spread, is keen to help Egypt overcome its political and economic problems.

Saudi Arabia earlier this month transferred a separate $1.5 billion to Cairo as direct budget support.

The new aid will finance three projects in Egypt worth $230 million, Ambassador Ahmed Kattan said in a statement emailed by the Saudi embassy in Cairo.

It includes $60 million to supply drinking water to the Cairo district of Nasr City, $80 million to renew and replace irrigation pumps and $90 million to build seed storage silos.

The fund will also place $200 million in revolving credit in a bank account to help Egyptian small- and medium-sized enterprises, the statement said.

Another $750 million line of credit to finance Saudi exports to Egypt will be exempted from a requirement that it be used to buy non-oil products.   Continued...

Powered by Reuters AlertNet. AlertNet provides news, images and insight from the world's disasters and conflicts and is brought to you by Reuters Foundation.