Egypt signs agreement to receive first tranche of U.S. aid

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Egypt has signed an agreement with the United States to receive $190 million in aid, a local news site reported Sunday.

The grant is considered to be the first tranche of the $1 billion aid package announced by President Barack Obama in May 2011, according to Ahram Online who quoted the Egyptian Minister of Planning and International Cooperation.

The agreement will be presented to Egypt’s Upper House of Parliament for ratification, Ashraf Al-Arabi said. The grant is expected to be received before year’s end and is to supposed to support the country’s state budget.

Egypt is currently suffering from low foreign currency reserves and a drained budget deficit and is hopeing to receive its $4.8 billion loan from the International Monetary Fund (IMF).

“The cure for the budget deficit needs broad structural measures and the help we are requesting from the IMF is not quick fixes,” Reuters reported Arabi as saying in a news conference.

With Egypt in political turmoil, some analysts have suggested the IMF could offer bridging financing until after the parliamentary elections, pending negotiations on a full deal.

Arabi played down such an idea. “It is not suggested for us to obtain a bridging loan,” he said. “This is offered by the IMF in its negotiations with many countries. In our case, we do not need bridging loans.”

He did not say clearly explain whether the IMF had actually offered Egypt short term funding.

IMF is hesitant to give the loan since political instability grips the country. Analysts have said the IMF may be reluctant to offer even short-term financing during the current chaos.

Last month Mursi called the elections to be held between April and June, but a court later cancelled his decree, throwing the electoral process into confusion.