Saudi Arabia said on Friday it had approved $430 million in project aid to Egypt and would allow Cairo to use a $750 million line of credit to import oil products. The aid, to be provided by the Saudi Fund for Development, is part of a package that Saudi Arabia announced a year ago to support the country's cash-strapped economy in the wake of an uprising that ousted President Hosni Mubarak. The uprising chased away tourists and foreign investors, two of Egypt's main sources of foreign currency, and economists have said the country will need a minimum of $11 billion over the next year to stave off a balance of payments crisis and a potential devaluation of its currency. Saudi Arabia, concerned that the turmoil in the Middle East may spread, is keen to help Egypt overcome its political and economic problems. Saudi Arabia earlier this month transferred a separate $1.5 billion to Cairo as direct budget support. The new aid will finance three projects in Egypt worth $230 million, Ambassador Ahmed Kattan said in a statement emailed by the Saudi embassy in Cairo. It includes $60 million to supply drinking water to the Cairo district of Nasr City, $80 million to renew and replace irrigation pumps and $90 million to build seed storage silos. The fund will also place $200 million in revolving credit in a bank account to help Egyptian small- and medium-sized enterprises, the statement said. Another $750 million line of credit to finance Saudi exports to Egypt will be exempted from a requirement that it be used to buy non-oil products. "Egypt has been exempted from importing $750 million worth of non-oil products from Saudi Arabia ... based on the severe oil-products shortage faced by Egypt," Kattan said in the statement. "Oil will continue being exported to Egypt in batches as soon as possible." Saudi Arabia deposited $1 billion in Egypt's central bank on June 2 and transferred $500 million to buy Egyptian T-bonds on June 4, Egyptian Finance Minister Mumtaz al-Saeed said this week. Egyptian financial newspaper al-Mal said on Tuesday the Saudis would buy seven-year bonds carrying a coupon of 5 percent.
