(See EXTRA and MET for more on Middle East unrest.)
June 9 (Bloomberg) -- The African Development Bank may lend Egypt as much as $1.5 billion to help the economy recover from the revolution that toppled President Hosni Mubarak in February, a bank official said.
“We will be able to commit between $1 billion and $1.5 billion” in funding to Egypt over the next 12 to 18 months, Jacob Kolster, the AfDB’s director for Tunisia, Libya and Egypt, said in an interview in Lisbon yesterday. “The Egyptians, from a financial point of view, will weather this crisis. The issue is really that they get going with some important economic and social reforms. We are there to support them.”
Mubarak resigned on Feb. 11 after three decades in power, ceding authority to a military council that dissolved parliament and promised elections later this year. The turmoil has damaged the country’s tourism industry and curbed industrial output.
AfDB President Donald Kaberuka and Kolster met Egyptian government officials in Lisbon yesterday before the lender’s annual general meeting to discuss what it could do to assist the North African nation.
On May 27, Group of Eight leaders said institutions including the World Bank and the AfDB could provide more than $20 billion for Egypt and Tunisia through 2013. French President Nicolas Sarkozy said G-8 countries will provide another $10 billion in direct aid, while oil-exporting countries in the Gulf such as Kuwait and Saudi Arabia will contribute $10 billion.
Next month, the International Monetary Fund’s executive board will consider approving a $3 billion loan to help Egypt fund its widening budget deficit. The shortfall may reach 11 percent of gross domestic product in the fiscal year through June 2012, compared with an expected 8.6 percent this year, Finance Minister Samir Radwan said on June 1.
The Egyptian revolt followed an uprising in Tunisia that toppled President Zine El Abidine Ben Ali in January. Protests subsequently spread to Yemen, Syria, Bahrain and Libya.
On May 30, the AfDB’s board approved a $500 million loan for Tunisia. The loan agreement will be signed with Tunisia’s government tomorrow and the money is likely to be disbursed within days, Kolster said.
The Tunis-based lender is set to approve a further $500 million in funding for Tunisia by year-end. Kolster expects the first tranche of $50 million will be made available next month and used to provide a line of credit for commercial banks that lend to small and medium-sized businesses.
The money will “give a boost to an economy that’s clearly heading for zero growth this year,” he said.
In Libya, rebels are fighting to end Muammar Qaddafi’s 42- year rule, with aerial backing from the North Atlantic Treaty Organization. The North African country has the continent’s largest oil reserves.
The AfDB is willing to aid Libya’s reconstruction once the fighting stops, Kolster said.
“The longer war drags on, the more the fundamental damage to the economic and social infrastructure,” he said. “We have intelligence that there is no more oil coming out of the ground. Pumps have been destroyed. The upside is here’s a country that has $250 billion in the bank and once you get the pumps running again they can easily pump out between 1.5 and 2 million barrels of oil per day.”
The AfDB, one of five major multilateral development lenders in the world, has 53 member countries from Africa and 24 from outside the continent, including the U.S., the European Union and Japan.
--Editors: Philip Sanders, Ana Monteiro
To contact the reporters on this story: Mike Cohen in Lisbon at firstname.lastname@example.org.
To contact the editor responsible for this story: Andrew J. Barden at email@example.com.