Bankers and economic experts said on Wednesday that international financial assistance provided by the United States, Saudi Arabia and the World Bank would not be of much help to the Egyptian economy.
The reason they cited was that the government would not receive the bulk of assistance in the form of direct cash, but rather in the form of loans and deposits to improve the country’s credit ratings and help it borrow from abroad.
National Bank Chairman Tarek Amer criticized the international assistance and its specific requirements for disbursement. He noted that the government would only be receiving liquidity in the amount of US$500 million out of the pledged US$4 billion in Saudi aid. Egypt requires cash to bridge the budget deficit.
Amer told Al-Masry Al-Youm that he expects the local economy to improve in three to four years as a result of the assistance, a period he described as being “too long” in light of the prevailing political situation.
He went on to say that the majority of aid comes in the form of infrastructure projects and investments, and is not the quick fix required by the Egyptian economy at the moment.
Amer added that the greatest challenge facing the Egyptian economy is political and social turmoil, stressing the need to control the internal situation and saying that aid will not benefit the country given its current instability. The US recently announced the allocation of some US$2 billion in aid to Egypt.
The World Bank announced on Tuesday its intention to provide $US4.5 billion to Egypt over the next 24 months. According to the bank, US$1 billion would be granted this year to support the budget and US$1 billion would be granted next year depending on the progress of political and economic reforms. The remaining US$2.5 billion would be invested in development projects and private sector loans.
Fakhry Fiki, the former Assistant to the Executive Director of the International Monetary Fund, said the only benefit to Egypt from the US$1 billion in financial assistance provided by the US is that it would help Egypt to borrow money.
Fiki pointed out that the United States had intervened to provide the aid after the government faced great difficulty in borrowing from international institutions.
Translated from the Arabic Edition
