Egypt likely needs over $10 billion aid -senior EU official

Reuters News
Posted: Sep 12, 2012 9:30 AM

By Adrian Croft and Justyna Pawlak

BRUSSELS (Reuters) - Egypt is likely to need more than $10 billion in external financing to help revive its economy, battered after a revolt that toppled the country's authoritarian government last year, a senior EU official said on Wednesday.

The European Union and other institutions and countries are considering financial support for Egypt in addition to a $4.8 billion loan that Cairo has requested from the International Monetary Fund (IMF), the official said, speaking on condition of anonymity.

"Egypt will need more than this," the official told a briefing ahead of a visit to Brussels by Egyptian President Mohamed Mursi on Thursday.

"Probably Egypt will need more than double this amount, more than $10 billion."

The bloc will "reinforce" the IMF package with aid of its own, but is still considering how much support to provide, the official said. Egypt in February asked the European Commission, the EU's executive arm, for aid worth 500 million euros ($642 million).

Egypt faces a balance of payments crisis after investors fled during 18 months of political turmoil which led to the fall of President Hosni Mubarak. The country hopes to reach a deal with the IMF by the end of the year, officials in Cairo have said.

Mursi's visit will be his first visit to Europe since becoming Egypt's first freely elected president in June. He will meet European Commission President Jose Manuel Barroso, EU foreign policy chief Catherine Ashton and Herman van Rompuy, President of the European Council, which represents EU governments.


The meetings will take place two days after Tuesday's attacks on the U.S. embassy in Cairo, where protesters scaled the walls, tore down the U.S. flag and burned it. Demonstrators said they were protesting about a U.S. film insulting the Prophet Mohammad.

Protesters in Libya attacked the U.S. consulate in Benghazi, killing the U.S. ambassador and three other embassy staff.

The talks in Brussels are expected to cover economic support, job creation, agriculture, energy and European private sector investment in Egypt, the official said. The Egyptians aim to develop their gas and renewable energy industries.

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Trade will be on the agenda but the European Union may not be ready to open talks with Egypt on a free trade agreement for a few months, the official said.

Egypt's future is important for the 27-member bloc, which sees the development of Arab Spring countries as an economic opportunity, but also fears the possibility of anti-European governments on the other side of the Mediterranean.

Last year, the EU introduced a "more for more" policy under which it links economic aid to progress in civil rights and democracy. ($1 = 0.7785 euros)

(Additional reporting by Jan Strupczewski; Editing by Sebastian Moffett and Robin Pomeroy)