Egypt Agrees $1bn in Funding for Food, Energy

Egypt's government has signed an agreement with the Saudi Arabia-based Islamic Development Bank (IDB) for $1 billion in funding for energy and food imports, the government said in a statement on Sunday. The agreement, which is with the International Islamic Trade Finance Corporation, part of the IDB, was signed in Cairo by Waleed Abdul Mohsen Al-Wohaib, the institution's chief executive, and Egypt's international cooperation minister, Fayza Abul-Naga. "Dr. Waleed al-Wohaib said the institution is keen to support the Egyptian economy by offering Islamic finance aimed at supplying strategic commodities such as wheat and petrol," the statement said.

The finance was part of a previously announced agreement to provide Egypt with $2.5 billion, it said. Egypt's outgoing army-backed government has struggled to secure aid promised by foreign donors after a popular uprising ousted President Hosni Mubarak last year and the country now risks a balance of payments crisis. Trade sources said this month that the government had struggled to obtain bank payments for its fuel purchases. They said this had led to shipping delays that may have disrupted supplies for transport, industry and farming.

The government denied any problems with energy supplies. A new government being formed by President Mohamed Morsi, who took office on Saturday after winning Egypt's first credible leadership election, will want to move fast to secure funding to plug a gap left by an exodus of foreign investors and tourists. The biggest chunk of aid so far was a $1 billion, eight-year loan from oil-rich Saudi Arabia in May but state borrowing costs are at historic highs and a pile of short-term debt raised since the uprising comes due in the second half of 2012.