US urges G8 to join debt swap with Egypt

AFP, Wednesday 25 May 2011

The United States on Wednesday urged its G8 partners to help Egypt convert its debts into investments for jobs as part of efforts to boost the country's flagging economy and fledgling democracy.

The appeal came in a letter from US Secretary of State Hillary Clinton and Treasury Secretary


Timothy Geithner, who also asked G8 countries to take other economic steps to back "Arab Spring" democracy movements.

"The United States is committed to a debt swap for Egypt and we are asking our partners to join us in this initiative," according to a copy of the letter.

The letter was addressed to the ministers of the Group of Eight leading industrial economies -- Britain, Canada, France, Germany, Italy, Japan, Russia and the United States -- on the eve of a meeting in Deauville, France.

"A debt swap will enable Egypt to channel its debt payments toward underwriting swift, sustainable job creation," Clinton and Geithner said.

"A shared response in the form of a multi-creditor debt swap for job creation would provide Egypt with financial relief while also ensuring that critical investments are made to improve the lives of Egyptian people," they said.

"We also should stand ready in the Paris Club to reinforce the forthcoming IMF package for Egypt," it said.

"At the same time, we should collectively commit to helping newly democratic governments recover assets that were stolen," the letter said, apparently referring to the transition

governments in Egypt and Tunisia.

It also urged the G8 to "lead efforts to reorient" the European Bank for Reconstruction and Development (EBRD) to back Arab democratic transitions much the same way it supported similar transitions in Central and Eastern Europe.

The letter called on "the Deauville Summit to support a mechanism that enables the EBRD to engage in the near-term to support private sector development in the region, as well as reforms that create conditions for successful entrepreneurship."

In his 19 May speech, US President Barack Obama unveiled a multi-billion dollar economic plan to spur and reward democratic change in the Middle East and North Africa, modeled on the evolution of post-Soviet Eastern Europe.


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