Saudi Arabia deposits $1 billion in Egypt bank

CAIRO, Egypt — Saudi Arabia has deposited $1 billion at the Egyptian central bank, helping stave off alarm over dwindling foreign currency reserves and boosting the government's case for a badly-needed $3.2 billion loan from the International Monetary Fund (IMF), reported Bloomberg. 

The announcement comes not long after Saudi Arabia's ambassador left Cairo in protest over demonstrations by Egyptians angered by the country's arrest of an Egyptian human rights lawyer.

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The Saudi funding also arrives at a critical point for Egypt's economy, with foreign reserves having shrunk some 60 percent since the end of 2010, according to Bloomberg. 

A statement released today by the Saudi embassy said the extent of the aid package — which come in addition to the $1 billion bank deposit — is still being negotiated, but $500 million is reportedly earmarked for development projects, $250 million for petroleum purchases, and an additional $200 million set aside for smaller project grants, said Businessweek.

The news is seen as likely to strengthen Egypt's IMF bid. The country applied for the loan in January, but Cairo's fractured political establishment has yet to come up with the economic recovery plan required in order to secure funding.  

A top fund official last week said "we can mobilize financing" the package for Egypt as soon as a satisfactory proposal has been received, according to the Associated Press, comments that may suggest the deal will not go through as planned on May 15.