Part of the AKP government's drive to make Turkey a regional leader, Ankara is set to hand Egypt the remaining half of a $2bn loan agreed last year, as the North African country struggles to get its economy back on track following the Arab Spring.
Turkey will transfer the outstanding $1bn in budget support within the next two months, Reuters reported on April 17, citing unnamed Turkish officials and banking sources. The news comes just a day after Cairo failed to agree a $4.8bn bailout from the International Monetary Fund, offering Turkey a chance to contrast its commitment to the Arab world with that of the West.
On April 13, Egypt's Shura council approved the loan deal with the Export Credit Bank of Turkey, which will see the cash piped to Egyptian investors importing Turkish capital goods and machinery, reported Ahram Online.
Under the Turkish agreement, announced last September during a visit to Ankara by Egyptian President Mohamed Morsi, the treasury handed Egypt the first $1bn. Eximbank will now supply the second tranche in the next two months, the sources said, although the interest rate on the loan has not yet been settled.
"The Egyptians are completing the deal's conditions at the moment. We expect them to get it done by the end of the month and the deal to come into effect afterwards," one of the sources said. "The deal will include capital goods and pre-determined projects. Egypt will soon have a shortlist of these projects."
The loan is likely to go down well with Turkey's giant construction companies, which work extensively in frontier and emerging markets in Central Asia, Africa and the Middle East. Exporters could also benefit. Turkish trade with Egypt rose by $2bn to reach $5bn in 2012, most of that figure consisting of Turkish exports.
Cairo insisted on April 17 that its talks with the IMF have not "failed," despite having seen the Washington lenders delegation leave the country without sealing an agreement. Turkey's jump into the void follows Qatar and Libya, who agreed last week to provide $5bn in support.
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