Tantawi Announces Loan from Saudi Allies
Field Marshal Mohamed Hussein Tantawi of Egypt told the official Egyptian press agency, MENA on Saturday that Saudi Arabia will lend Egypt emergency monies in the amount of $4 billion.
Tantawi, who is the head of Egypt’s ruling military council said, “The $4bn will be distributed in the form of soft loans, deposits and grants.”
Egypt and Saudi Arabia have long been strong allies, as they are the two most powerful of the Sunni Arab states, but with the removal of Egypt’s president Hosni Mubarak, a tried and true friend of Saudi Arabia, by the recent Egyptian revolution, it was unclear if Saudi Arabia still holds Egypt in its favor. There is also distrust brewing on the part of Saudi Arabia as Egypt has begun seeking closer relations with Iran, thirty years after the Shah was deposed.
But Saudi Arabia seems to want to maintain its good relations with Egypt, agreeing to the loan. Field Marshall Tantawi phoned King Abdullah of Saudi Arabia on Saturday in order to thank him for the generous loan, as reported in the Saudi press.
Egypt’s foreign exchange reserves have been depleted over the months since the revolution, creating an atmosphere of uncertainty about Egypt’s economic stability. In December, two months before February’s revolution Egypt’s foreign exchange reserves were at $36 billion. Last month’s foreign exchange reserves were reported to be at $28 billion, a loss of $12 billion, or about one third of the total.
US Also Lending a Hand
President Barak Obama had already announced last Thursday, before the Saudi loan was announced, that the US will cancel as much as $1 billion in bilateral debt which is owed to the US by Egypt. President Obama added that the US will also begin to set up enterprise funds on behalf of Egypt.