1 - 7 November 2001
Issue No.558
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Al-Ahram Weekly Online 1 - 7 November 2001 Issue No.558 |
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Support to continue
Will recent and ongoing political and economic upheavals harm Egyptian-American economic ties? Mona El-Fiqi reports on what USAID officials say
Officials of the US Agency for International Development (USAID) asserted that the war in Afghanistan will not have a negative impact on Egypt-US economic relations.
"The US partnership with Egypt remains strong, firm and unchanged," said Willard Pearson, USAID director in Egypt, adding that US economic assistance to Egypt will not be affected.
Pearson explained that USAID funds allotted to Egypt will not be reduced beyond the five per cent annual reduction that began to be implemented four years ago and which will continue for the next six years. For the current year, USAID is providing Egypt with $650 million.
Pearson said that the Egyptian economy is now expected to face previously unanticipated shocks such as a decrease in tourism. He added that USAID is willing to meet with Egyptian officials to discuss ways that it might help the government deal with any economic repercussions.
Meanwhile, USAID's work is continuing in Egypt as previously planned. The Ministry of International Cooperation recently signed the agreement for the next phase of the Commodity Import Programme (CIP), one of the aid organisation's main programmes in the country.
According to the agreement, USAID will provide the CIP with $200 million, of which $120 million is already available, to 31 Egyptian commercial banks, to finance the import of machinery and materials from the United States by the Egyptian private sector.
The CIP provides soft loans to the private sector and permits their repayment in Egyptian pounds to encourage businessmen to import production inputs from the US.
Since USAID began working in Egypt in 1975, the CIP programme has accounted for approximately $6.6 billion, or about one fourth of US assistance provided to Egypt to date.
When the CIP was initiated, it financed imports by the public sector. Since 1986, however, it has been directed exclusively at the private sector.
Since shifting its focus to the private sector, the CIP has provided funding to more than 1,500 Egyptian private firms employing 376,000 workers. Under the programme, these companies obtained $2.7 billion to fund imports from more than 1,900 American suppliers.
Within the CIP framework, the annual maximum transaction size for any firm, for both capital and non-capital goods, is $10,000. The grace periods provided for loan repayment under the CIP vary from 6 to 36 months, depending on whether the importer is a dealer or end- user and also whether the import is a capital or non-capital good.
Importers repay loans in local currency, which is deposited into a special Central Bank account. This account is used by the government to finance development activities previously agreed upon by the government and USAID. The repayment period for loans ranges from six to eight years.
Robert Van Horn, the head of the CIP, said that the programme helps the private sector assume a larger role in the Egyptian economy since the investments financed by the programme have helped to increase productivity and create jobs. Because the CIP's goal is to enhance the private sector's productivity, it does not provide financing for the import of luxury goods.
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