Donor countries wrap up meeting with pledge of $10.3 bln to Egypt
Egypt, Economics, 2/7/2002

Egypt wrapped up a two-day donors' meeting yesterday saying donors had pledged $10.3 billion over the next three years, with about $2.1 billion for quick disbursement this year.

Faiza Abu el-Naga, Minister of State for Foreign Affairs, told a news conference at the Red Sea resort of Sharm el-Sheikh that all the pledges were fresh funds.

"Preliminary indicators are that the members of the consultative group are to commit an amount of $10.3 billion for the three-year period of 2002 to 2004 of which roughly $2.1 billion is in the form of quick disbursing assistance for this year, requiring a credible macroeconomic picture," she said.

Abu el-Naga added that the donor countries appreciated the achievements which Egypt had made over the past two decades, indicating that economic and social development were two sides of one coin.

She explained that the donors had emphasised the role of the private sector in creating jobs and increasing the robustness and competitiveness of the national economy in general.

The donor countries have also stressed the need for improving work environment and called for regular publication of accurate data to enhance transparency.

Egypt pledged to take the necessary measures to create the right environment for the national economy to recover from its present difficulties.

The Egyptian government presented a package of policies aimed at encouraging investments, breathing vigour into the sagging economy and diversifying sources of national income.

The government also pledged to put weight behind the real estate mortgage law as well as endorsing the partnership accord with Europe which was sealed last June.

Egypt had previously said it needed about $2.5 billion in fresh, quickly available, funds to plug a forecast current account shortfall for the year to June, as key hard currency earners such as tourism have been hammered since September.

But prior to the talks, a senior World Bank official had said Egypt could expect to raise about $2 billion without too much difficulty.

"Egypt has got what it wants to fill the (current account) gap. Everyone is satisfied," one donor official said at the meeting where some 37 donors were gathered.

Some analysts had earlier said Egypt's role as a regional heavyweight at a tense time for the Middle East and its cooperation in anti-terror efforts since September 11 could encourage generosity and a softer line from donors.

Donors said negotiations on details of disbursing the initial $2.1 billion, including a Compensatory Financing Facility loan of about $500 million from the International Monetary Fund, were continuing.

During the talks, donors urged Egypt to press ahead with long-term reforms, including making the exchange rate more flexible and reviving the privatisation programme, which has slowed to a crawl.

"My institution is discussing reforms with the Egyptian government and we want them to look at medium and longer-term solutions, not just the short-term," the representative of a key multilateral donor told Reuters during the negotiations.

Egyptian officials pledged to continue key liberalisation measures, including reforming the financial sector.

Previous Stories:
  Stability in Egypt is enough for attracting more capitals   (2/6/2002)
  Positive signs of response to Egypt's demands of $ 2.5 billion   (2/5/2002)
  Egyptian economy sound, despite looming recession   (2/5/2002)

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