Libya grants Egypt $2 bln loan

Libya agreed on Wednesday to lend Egypt 2 billion U.S. dollars without interests to boost the latter 's economy and foreign exchange reserves, Egyptian state-run news agency MENA reported.

According to an agreement signed Wednesday evening, the loan will be paid back over five years with a three-year grace period without interests, a huge relief to Egypt's fiscal burden, a finance ministry official said.

This loan, expected to arrive next week, and another 3 billion U.S. dollars from Qatar will increase Egypt's foreign currency reserves from 13.4 to 18.4 billion U.S. dollars, the highest level in months.

The official added that Egypt's currency flow will boost its negotiations with the International Monetary Fund over the rescue loan of 4.8 billion U.S. dollars, dealing a blow to the dollar traders in the black markets.

He asserted the dollar traders would soon suffer severe losses amid speculations of the dollar's sharp depreciation that has already started on Tuesday.

Egypt is currently struggling to survive a severe financial crisis brought about by two years of turmoil and instability following the upheaval in early 2011 that ousted former President Hosni Mubarak.

The Central Bank of Egypt has said that the foreign fund reserves declined from 36 billion dollars in January 2011 to 13.4 billion dollars at the end of March 2013.

The country is also suffering from a growing budget deficit that exceeded 21 billion U.S. dollars over the past eight months, according to a recent finance ministry report.

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