Egypt Independent

G8 to extend Arab Spring financing pledge to US$38 billion



MARSEILLE, France – Group of Eight finance chiefs gathered in southern France on Saturday will pledge US$38 billion in financing to Tunisia, Egypt, Morocco and Jordan over 2011-13, a G8 source told Reuters.

Finance ministers and senior officials from the G7 major economies plus Russia are to extend an assistance partnership set up with Egypt and Tunisia at a May summit in Deauville, northern France, to bring in Morocco and Jordan.

The financing, to support reform efforts in the wake of the Arab Spring uprisings, will be in addition to funding that could be available from the International Monetary Fund.

International financial institutions at the G8 talks are expected to warn of the challenges faced by Arab Spring countries trying to tap external finance while faced with high risk perceptions and social and financial strains at home.

Officials will likely call for enhanced access to developed country markets for North African and Middle Eastern products and labor to avoid aid dependency and help build up private sector industries, a source close to the talks said.

The G8 meeting was tacked onto the end of a Group of Seven finance chiefs meeting on Friday in the Mediterranean port city of Marseille that pledged a coordinated response to the faltering global economic recovery but offered few specifics to appease beleaguered financial markets.

The Deauville initiative was set up under France's G8 presidency to help North African and Middle Eastern countries swept up in the Arab Spring foster democratic reforms by making aid and development credits conditional on political and economic reforms.

The financing is mostly in the form of loans, rather than outright grants, provided by G8 and Arab countries, the World Bank, multilateral development banks such as the European Bank for Reconstruction and Development (EBRD) and other lenders.

G8 officials were due to endorse the extended Deauville partnership later on Saturday after spending the morning discussing the economic challenges faced by countries like Tunisia and Egypt that have ousted autocratic leaders.

Britain would push to ramp up trade and open markets between Europe and North African and Arab states, a Treasury spokesman told reporters on Friday.

The EBRD is also taking a lead role in the Deauville partnership as it extends its lending mandate to encompass countries affected by the Arab Spring.

Delegations taking part in Saturday's G8 meeting included representatives of Libya's ruling interim council, Saudi Arabia, the United Arab Emirates, Kuwait, Qatar and Turkey.

Regional bodies present included the Arab monetary fund, the Arab fund for economic and social development and the OPEC's fund for international development, OFID.