Washington–The US has asked Japan and European nations to forgive some of Egypt's debt to support a country seen as holding the key to democratization and stability in the Arab world, The Nikkei reported Saturday.
Letters co-signed by Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton were sent by the end of last month to the Group of Eight nations, as well as Scandinavian countries that have loan claims against Egypt, according to sources.
The US government sees debt waivers as key to assisting Egypt, whose ability to meet its foreign debt obligations has eroded significantly in light of political turmoil. It is urging Egypt to finance employment measures and infrastructure investment with the money saved.
Egypt's foreign debt, including private-sector loans, totaled US$33.7 billion as of June 30, 2010, according to the nation's central bank.
The amount owed to Japan was US$4 billion, more than any other country.
In the letters, the US did not suggest specific amounts for debt waivers by each nation, but it apparently encouraged Japan and European nations to take steps similar to its own.
The US has so far decided on a rescue package of up to US$2 billion for Egypt, including debt forgiveness and new loans and investment.
However, Japan and Europe are reluctant to waive debt, in part because of the huge cost burden. Debt forgiveness would also make fresh lending by governments and banks difficult.
As an alternative, Japan will likely consider extending long-term, low-interest yen loans on its own and providing new loans through international organizations such as the World Bank.
