Continuing the Justice and Development Party's (AKP) drive to make Turkey a regional leader, the Turkish government is set to raise a $1bn credit line already promised to Egypt by a further $250m, a senior official said on May 20.
Turkish Deputy Prime Minister Ali Babacan said that the additional cash would be handed over this month along with the remaining half of a $2bn loan agreed last year with Cairo, as the North African country struggles to get its economy back on track following the Arab Spring. Under the agreement, announced last September during a visit to Ankara by Egyptian President Mohamed Morsi, Turkey's treasury has already issued the first $1bn.
Unnamed sources in Ankara told Reuters on April 17 that Turkey is now ready to provide the new tranche. That was just a day after Cairo failed to agree a $4.8bn bailout with the International Monetary Fund. The move clearly offered Turkey a chance to stress its commitment to the Arab world, in contrast to the West.
On April 13, Egypt's Shura council approved the deal on the latest tranche with the Export Credit Bank of Turkey, which will see the cash piped to Egyptian investors importing Turkish capital goods and machinery. Eximbank is set to supply the cash this month. The deal will include capital goods and pre-determined projects.
The loan is likely to go down well with Turkey's giant construction companies, which work extensively in frontier and emerging markets in Central Asia, Africa and the Middle East. Exporters could also benefit. Turkish trade with Egypt rose by $2bn to reach $5bn in 2012, most of that figure consisting of Turkish exports.
Babacan said the additional loan is specifically aimed at supporting exports of the Turkish defense industry. The deputy PM added that a cooperation agreement was penned between Turkey's Undersecretariat for Defense Industries and Eximbank last week.
Egypt insists that its talks with the IMF have not "failed," despite the Washington lender's delegation leaving the country in April without sealing an agreement. Egyptian Minister of Finance Fayad Abdel-Moneim reiterated recently that talks with the IMF are "serious" and negotiations with the global lender ongoing. However, thus far, it has been left to the region to offer financial support; Turkey's new cash followed Qatar and Libya, which agreed last month to provide $5bn.
Analysts told Daily News Egypt that the additional loan from Turkey is a political message rather than an economic move. "Turkey is simply saying 'we are with you guys'," said Karim Helal, Chairman of Egypt's Association of South East and Asian Nations business association.