US nears deal to cut Egypt debt by $1 bn: report

NEW YORK (AFP) - The United States is weighing a deal with Egypt's new rulers to relieve $1 billion worth of debt, The New York Times reported.

US President Barack Obama first promised the aid in May 2011, along with another $1 billion destined to assist Egypt's democratic transition after the fall of longtime ruler Hosni Mubarak.

Egypt, which has seen its economy worsen since Mubarak's overthrow in February 2011, asked last month for a $4.8 billion loan from the International Monetary Fund, which in turn urged economic reforms.

The Times said that the Obama administration last week sent the first of two delegations to detail the proposed debt assistance, along with $375 million in financing and loan guarantees for American lenders who invest in Egypt and a $60 million investment fund for Egyptian businesses.

"Our goal is to send a very strong message to Egypt that the government understands it's not just about assistance," the newspaper quoted Deputy Secretary of State Thomas Nides as saying. "It's about growth and business."

He was speaking ahead of a large business delegation led by the State Department and the US Chamber of Commerce that will take executives from nearly 50 US firms to Cairo starting Saturday.

The Times said the executives and the officials traveling with them, including Nides, will call on the President Mohamed Morsi's government to make reforms in taxation, bankruptcy and labor laws in order to foster investment.

"It's important for the US to give Egypt a reason to look to the West, as well as the East," said Lionel Johnson, the chamber's vice president for the Middle East and North Africa.

Morsi is Egypt's first democratically elected leader and the first Islamist to lead the Arab world's most populous country.