Saudi Arabia shows its financial might with aid for MENA nations

Published September 20th, 2012 - 08:21 GMT
The Saudi King and the Egyptian President have met several times since Morsi's election, as the oil-rich Kingdom offers substantial financial aid packages
The Saudi King and the Egyptian President have met several times since Morsi's election, as the oil-rich Kingdom offers substantial financial aid packages

Egypt has received over a third of the $4 billion aid pledged by Saudi Arabia in the wake of last year's uprising, a report from the International Monetary Fund shows.

Citing data from Riyadh's finance ministry, the report says the oil-rich kingdom has so far disbursed about a fifth of the financial help it promised to Arab countries since uprisings erupted last year.

Egypt has received $1.5 billion of the $4.0 billion which Saudi pledged, while Jordan has taken receipt of $1.4 billion from a total of $2.7 billion, according to IMF data.
So far Cairo has seen a $1 billion deposit in the Central Bank of Egypt in May, as well as a $500 million grant in the fourth quarter of 2011.
The aid still to arrive includes $500 million in soft loans for development programmes from the Saudi Fund for Development, and a grant of $200 million to to finance small and medium-sized enterprises and other projects.
Saudi will also extend $750 million as a line of credit to finance Saudi exports to Egypt.
Egyptian President Mohamed Morsi has visited the Kingdom twice since taking power in July.
Riyadh pledged Arab countries a total of $17.9 billion in loans, grants and other support between the start of 2011 and June 1 this year, potentially making it a key donor as Arab countries struggle to repair economic damage caused by the uprisings.
It disbursed $3.7 billion of that amount during the period, the International Monetary Fund says in a report on the Saudi Arabian economy, released this week after regular consultations with the Saudi government.
"Regional support has come both in the form of substantial new pledges of financial assistance and indirectly, as fiscal expansion in Saudi Arabia creates increased demand for imports and also raises remittances from foreign labour employed in the Kingdom," the IMF said.
Political and economic uncertainties have slowed transfers of aid by Saudi Arabia and other Gulf countries since the uprisings, analysts have said. 
The donors want to prevent economic collapses in Arab countries but are wary of giving large sums quickly to new governments which might turn out to be unfriendly or waste the funds.
The IMF figures may not include some aid disbursed after 1 June. 
Saudi Arabia has given $350 million of $3.6 billion that it pledged to Yemen, the data shows; but Yemeni officials said this month that Riyadh had provided their country with over $2.2 billion of oil and fuel products this year plus a $1 billion loan to Yemen's central bank.
Morocco and Tunisia are still waiting for the $1.25 billion and $750 million respectively which they were promised, according to the IMF data.
Early last year Bahrain and Oman were promised a total of $5 billion by Saudi Arabia, part of a $20 billion pledge by wealthy Gulf Arab states to help the two countries ease social tensions. 
The money has not yet started to flow; Bahrain said in June that the aid fund had not yet been capitalised, though it still expected to receive an initial allocation soon.
The $17.9 billion total for Saudi aid pledges is equivalent to nearly 10 percent of the country's 690 billion riyal ($184 billion) state budget for 2012, according to a Reuters calculation. Riyadh has also promised $15 billion of additional resources to the IMF.
The world's largest oil exporter is running a large budget surplus, which is expected to be about 13 percent of gross domestic product this year, according to a Reuters poll of economists in July.

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