Egypt should borrow money from countries: Arab Investors Union ambassador
Finance Minister Hani Kadry - YOUM7 (Archive)

CAIRO: Secretary-General of the Arab Investors Union Ambassador Gamal Bayoumi said on Thursday that Egypt’s budget financing gap is in tune with its major internal obligations, and that the grants and loans provided to it by other countries will help it fulfill such obligations, Youm7 reported.

Most of the grants are dedicated to infrastructure works like potable water, sewage and mending roads, Bayoumi said, and the agreements signed by the Ministry of Planning and International Cooperation remove heavy burdens incurred by the government, which is obliged to improve costly infrastructure in all governorates.

He also said that asking for aid from the World Bank is one of Egypt’s “authentic rights,” as it is one of the contributors to the World Bank.

Bank of America said in a report released Monday that Egypt will need an additional $12 billion in aid from Gulf countries in order to keep its foreign monetary reserves stable in the upcoming fiscal year.

Following the ouster of President Mohamed Morsi, Saudi Arabia, Kuwait and the United Arab Emirates pledged to grant Egypt $20.8 billion, and have so far provided an estimated $18 billion, Al-Shorouq reported.

Of the Gulf aid, $8 billion was transferred to Egypt as deposits in the Central Bank, $7 billion in petroleum shipments and $3 billion in grants.

Bayoumi said that all countries receive loans to finance different projects, and Egypt’s financial situation allows it to receive loans from abroad, especially since it has committed to pay for installments of foreign debt valued at $2 billion annually.

But Alia Al-Mahdi, former dean of the Faculty of Economics and Political Science at Cairo University, told The Cairo Post that borrowing or receiving aid from Gulf countries or other foreign countries “is not a likely solution for keeping reserve stability.”

“The Gulf countries’ aid is a financial obligation that needs to be repaid,” she said.

Al-Mahdi said Egypt should find other solutions to increase its foreign reserves, through increasing direct and indirect investments, boosting tourism revenues and promoting exports.

Minister of Finance Hany Kadry said that the generous aid Egypt received from Gulf countries are expected to contribute in decreasing the budget deficit from 14 percent to 11 or 11.5 percent, according to the Ministry of Finance’s website.

Additional reporting by Omayma Shokry.

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