Obama to offer debt relief to Egypt in Mideast speech

By Jeff Mason

WASHINGTON (Reuters) - President Barack Obama will unveil an economic aid program for Egypt and Tunisia on Thursday as part of a broad effort to support democratic reform in the Middle East and North Africa, U.S. officials said.

Senior advisers to Obama, previewing parts of his speech, said Wednesday the United States would offer debt relief totaling roughly $1 billion "over a few years" to Egypt through a debt swap mechanism that would invest the money to boost youth employment and support entrepreneurs.

Washington would also loan or guarantee loans up to a total of $1 billion through the Overseas Private Investment Corp (OPIC) for Egypt to finance infrastructure development and boost jobs, the officials told reporters on a conference call.

Several billion dollars in additional financing would come from multilateral development banks as well.

The administration would also seek to foster trade and economic development throughout the region and encourage private sector investment, the officials said.

"We think these initiatives will help Egypt and Tunisia as they undertake the twin challenges of economic transformation and democratization," one official said.

The officials dodged a question on whether the debt relief package was enough.

"Egypt has, I think, a very good prospect of accessing private capital markets, and that's important to Egypt's future economic vibrancy, and that's something that we know economic leaders in Egypt want to reinforce," one official said when asked why the country's full debt was not canceled.