The Great Debate UK
By Una Galani
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
DUBAI -- The G8 could help transform the Middle East economies. The World Bank has pledged $6 billion of aid to Egypt and Tunisia, but the summit of industrialised nations' leaders this week could go further and come up with a model to prevent the Arab spring turning into an Arab winter. A significant package backed by multi-lateral institutions would be crucial to win back investor confidence.
Financial efforts to support the region so far have been piecemeal. On top of the substantial commitment from the World Bank, there's $2 billion-plus from America, another $4 billion pledge by Saudi to Egypt, and some small enterprise funds here and there. That's a mix of lending to both governments and the private sector over different periods of time. There are also ongoing talks with the International Monetary Fund.
It's tough to assess the total needs of an entire region while it is still in motion. But a big headline figure in excess of at least, say, $15 billion to Egypt and Tunisia would help bring back foreign direct investment, even if it is just an addition of various commitments. Egypt alone says it faces a $12 billion funding gap until mid-2012. Tunisia is in slightly better fiscal shape with a fiscal deficit forecast to reach 4.3 percent in 2011.