CAIRO: A $4 billion aid package Saudi Arabia has pledged to Egypt will include a $1 billion deposit at the Central Bank of Egypt and $500 billion in bond purchases, Al-Ahram newspaper quoted a Saudi official Sunday as saying. The package, which Egypt announced Sunday, is designed to support the country's cash-strapped economy in the wake of the upheaval that ousted president Hosni Mubarak on Feb. 11. The turmoil has caused tourism and investor revenue to dry up at a time when high popular expectations have increased the pressure on the budget. Egypt has been asking donors and the International Monetary Fund to help bridge an estimated at $10-12 billion funding gap for the financial year that begins on July 1, economists said. The $1 billion central bank deposit would be based on arrangements agreed upon by the Saudi and Egyptian central banks, Al-Ahram quoted Saudi ambassador to Cairo Ahmed Bin Abdulaziz Kattan as saying. Since the beginning of the year, Egypt's central bank has drawn down its net international reserves by $6 billion to finance a balance of payments gap exasperated by the political turmoil. Reserves now stand at $28 billion, equal to an import cover of about 4.5 months, according to economists. Kattan said the package would also include $500 million for general budget support and a $500 million soft loan. Yet another part of the package would be contain $500 million in soft loans for development programs from the Saudi Fund for Development and a grant of $200 million to be placed with the fund or in a current account to finance projects such as small and medium-sized enterprises. Another $750 million would be extended as a line of credit to finance Saudi exports to Egypt, Al-Ahram cited Kattan as saying. Egyptian finance minister Samir Radwan said Thursday he expected gross domestic product would grow 3-4 percent in fiscal year 2011/12. US President Barack Obama said in a speech Thursday he would relieve Egypt of up to $1 billion in debt and guarantee another $1 billion in borrowing to finance infrastructure and job creation.
