The IMF has approved a $4.8 billion loan to Egypt, giving it a seal of approval expected to trigger the release of other aid monies. “As well as boosting investor confidence, the IMF deal is expected to trigger more aid and concessionary finance.”
“The authorities’ program will be supported by a financing package of $14.5 billion in loans and deposits on favorable terms from a range of bilateral and multilateral partners, including the IMF,” the Fund’s Bauer said in a statement.
He did not give a breakdown, but Qatar and Saudi Arabia have already provided support and pledged more. The European Union and the United States have also pledged funds.
In other news, “US President Barack Obama thanked his Egyptian counterpart Mohamed Morsi on Wednesday for his role is negotiating a planned truce between Israel and Palestinian militants in Gaza.”
The Guardian also reports that “Barack Obama heaped praise on Israeli prime minister Binyamin Netanyahu for agreeing to the Egyptian ceasefire plan and offered increased US funding to beef up Israel’s air defence batteries.”
The aid for Egypt comes at a particularly welcome time. It’s foreign exchange are only half of what they used to be.
It is unclear how well Hamas will do in the transaction. The Palestinian authority is the recipient of $147 million in funding from the Obama administration, which also gave $1.5 billion to Egypt before the current crisis began.
In what seems like a counterintuitive result, oil prices rose on news of a ceasefire, reflecting the possibility that economic demand will be higher given peace in the Middle East than without it.