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Mon 19 Sep 2011 03:04 PM

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Saudi, UAE in talks over $5bn Egypt bailout

OPEC kingpin Saudi has already given $500m to protest-hit Egypt, says finance minister

Saudi, UAE in talks over $5bn Egypt bailout
Egyptian finance minister Hazem el-Beblawi (left) said the financial package from Saudi and the UAe could exceed $5bn

Egypt is
discussing financial packages for budgetary and other support with Saudi Arabia
and the UAE that could exceed a total of $5bn based on figures initially proposed,
the Egyptian finance minister said on Monday.

Hazem
el-Beblawi also said that Cairo was open to "all sorts of
cooperation" with the International Monetary Fund, which offered a $3bn
financing package earlier this year that Egypt then turned down in June.

The IMF
package was negotiated and turned down when another minister was in office. The
minister said at the time Egypt had revised its budget so it no longer needed
the cash and also said army rulers were concerned about building up debts.

New
minister Beblawi said: "We are open for all sorts of cooperation that will
include everything ... We are considering the whole thing according to the
needs of the country," he said before talks to be held during IMF and
World Bank meetings in Washington this month.

"I
don't want to give the impression that I am going to negotiate for a loan, but
I am going with an open mind," the finance minister said, adding that he
would listen to any proposals the institutions made.

The
government forecasts its budget deficit for the year ending June 2012 will be
8.6 percent of gross domestic product. It had been forecast at 11 percent
before it was revised down. Economists say the lower forecast may be
optimistic.

Egypt's
economy grew by a slower-than-expected 1.8 percent in the year to June 2011,
after the economy was disrupted by the uprising that drove Hosni Mubarak from
office.

The
government expects growth of 3-3.5 percent in the current financial year, that
runs July-June.

Beblawi
said he was discussing financing packages offered by Gulf oil producers Saudi Arabia
and the UAE.

"We
have received $500m from Saudi Arabia. They are proposing a package. We are
still in discussions. The package is much bigger," he said.

"And
also another package is being discussed with the UAE. There was a delegation from
the Emirates here yesterday [Sunday], and we are finalising. I would not
discuss the exact proposal until approved by both parties," he added.

Asked
about the value of the combined packages, he said: "When we were starting
discussions we received ideas from different parties and the total amount was
$5-7bn." He then added it was "closer to $5bn."

The
packages would cover a mixture of budgetary support and other financing, but he
did not give details.

"We
will be negotiating very soon a facility from the Arab Monetary Fund," he
said, adding that this was "closer to half a billion" US dollars.

He said
Qatar and Kuwait had also voiced support but said these offers had not
progressed till now.