Egypt to receive $6.5bn EU grants
Cairo, January 13, 2013
European Council president Herman Van Rompuy, visiting Cairo, said on Sunday the European Union and other financial institutions had offered Egypt over 5 billion euros ($6.5 billion) to support Egypt's democratic transition.
"The European Union and associated financial institutions have offered an amount of more than 5 billion euros in grants, concessional loans and loans for a period of 2012 and 2013 to support Egypt's democratic transition," Rompuy told reporters.
"I welcome therefore the fact that important discussions with the IMF are continuing," he said after talks with Egyptian President Mohamed Mursi.
Egypt won preliminary approval from the IMF in November but subsequent turmoil forced the government to delay a series of bitterly unpopular austerity measures deemed necessary to win the IMF board's final approval.
On Dec. 29 its central bank alarmed investors when it said its foreign reserves had reached a "minimum and critical limit".
Adding to pressure on the Egyptian pound, violent protests in late November and early December set off a rush to convert the local currency into dollars, sending the pound to record lows on fears of a messy devaluation.
Importers have also warned that the weakening currency and uncertainty about how low it can go could lead to sharp rises in the prices of imports - a decisive factor for a desert country which depends on food imports.
Prime Minister Hisham Kandil told a Cairo business forum that a "home-grown fiscal and financial programme" agreed with the Fund in November had to be tweaked, delaying implementation, but said talks with the IMF would resume soon.
"Because of the domestic situation we had to postpone that (plan), so we are doing a quick evaluation. We are going to be back on track very soon," he said.-Reuters