(AFP) – Libya has granted an interest-free loan of $2 billion to cash-strapped Egypt to help it battle its economic crisis, local media reported on Thursday, citing an Egyptian finance ministry official.
The loan is to be repaid within five years, with a three-year grace period, the unnamed official is quoted as saying.
Cairo “on Wednesday signed an agreement with the government of Libya under which it will be granted an interest-free loan of $2 billion (1.53 billion euros) with the aim of boosting the state’s budget and its foreign reserves,” he said.
The announcement comes as Cairo holds difficult talks with the International Monetary Fund over a loan of $4.8 billion as part of a financing programme to lift Egypt’s economy out of crisis.
The size of the loan may change, IMF officials have said, without elaborating.
Egypt’s authorities believe the loan will help restore investor confidence in the country, where unrest that accompanied the 2011 uprising that toppled president Hosni Mubarak has caused a significant drop in revenue from the once-lucrative tourism industry.
Foreign reserves have plunged from $36 billion to some $13 billion in two years, and the budget deficit is increasing.
Energy-rich Qatar announced on Wednesday it would buy bonds from Egypt worth $3 billion over and above a previously announced aid package amounting to $5 billion.