Sunday, June 21, 2009

AfDB in talks with Egypt over 1 billion budget loan

JOHANNESBURG, June 19 (Reuters) - Egypt has asked the African Development Bank (AfDB) for a budgetary support loan to offset the impact of the global economic crisis, a senior bank official said on Friday.

"We are in discussions over a budget support loan with the Government of Egypt to address the impact of the financial crisis and to support the reforms that are under way," Gabriel Negatu, the AfDB's financial reforms director, told Reuters.

He declined to reveal details of the proposed loans.

Egypt's central bank cut its key overnight interest rates by 50 basis points on Friday to help contain the impact of global financial turmoil on its economy, whose growth has fallen well below the 7-8 percent achieved in late 2007 and early 2008.

Receipts from tourism, one of its main foreign currency earners along with the Suez Canal, fell 17.3 percent in the three months from January to March, compared to the same period a year earlier.

The Tunis-based AfDB announced a $1.5 billion emergency loan to Botswana two weeks ago to plug a budget deficit estimated at 13.5 percent of gross domestic product, and said other countries were coming forward to seek similar support.

Negatu also said the AfDB had held talks with Namibia about a similar package to Botswana. He declined to give further details.

AfDB President Donald Kaberuka told Reuters last week he was particularly concerned about countries heavily dependent, like Botswana, on one or two mineral commodities, those emerging from conflict and states hit hard by last year's sudden exodus of foreign capital.

The AfDB seeks to reduce poverty and mobilise resources for Africa's economic and social development. It borrows from capital markets to provide loans to its regional members.