US To Forgive $1 Billion From Egyptian Debt

The United States government is nearing a deal to forgive $1 billion in debt for Egypt’s newly-established Islamist government, said the New York Times on Monday, with the agreement set to be part international assistance package intended to “bolster Egypt’s transition to democracy,” according to administration officials.

The United States government is nearing a deal to forgive $1 billion in debt for Egypt’s newly-established Islamist government, said the New York Times on Monday, with the agreement set to be part international assistance package intended to “bolster Egypt’s transition to democracy,” according to administration officials.

According to the paper, the U.S. government will also throw its support behind a $4.8 billion loan being negotiated between Egypt and the International Monetary Fund; while a delegation was sent to Egypt last week to work out the details of the proposed debt assistance.

Apart from forgiving $1 billion out of Egypt’s $3 billion debt, the U.S. are also set to promise an additional $375 million in financing and loan guarantees for American financiers who invest in Egypt and a $60 million investment fund for Egyptian businesses.

The NYT suggests that U.S. government officials may have accelerated its assistance to Egypt after fearing that it “risks losing influence and investment opportunities to countries like China.”

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[quote]“It’s important for the U.S. to give Egypt a reason to look to the West, as well as the East,” told Lionel Johnson, Vice President of the U.S. Chamber of Commerce for the Middle East and North Africa, to the NYT.[/quote]

Deputy Secretary of State Thomas R. Nides, added that, “our (the U.S.’s) goal is to send a very strong message to Egypt that the government understands it’s not just about assistance.”

“It’s about growth and business,” he said.

According to some American officials, the U.S. have been pleasantly surprised by how open new Egyptian President Mohamed Morsi and his advisers have been to economic changes.

“They sound like Republicans half the time,” said one administration official, who noted Egypt’s sharp focus on creating jobs.

Some 50 American business leaders – including representatives from Boeing, General Electric, Google and Citigroup – were sent to Egypt last week as part of assistance negotiations between the two countries.

The delegation was led by Robert Hormats, the U.S. undersecretary of State for economic growth and a former Goldman Sachs executive; and met with Egyptian leaders to encourage market liberalisation changes, as well as other measures that would make it easier to do business in the country.

“The United States is working to help relieve Egypt of part of its immediate fiscal and balance-of-payments pressure in support of the Egyptian government’s own, home-grown reform plan,” said Hormats in a speech at the American Chamber of Commerce in Egypt, as cited by The Washington Post.

[quote]”Progress will only be possible if the talents of all citizens are drawn upon and all have a voice—men and women, all religious groups, and all parts of the country,” he added.[/quote]

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