The Arab Monetary Fund (AMF) expects to lend about US$500 million (Dh1.83 billion) in financial aid this year as Egypt and Tunisia seek help to plug financial holes in their economies, said the fund's director general.
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With about $14bn in capital and the ability to boost its resources further if necessary, the fund was capable of meeting requests from economies in the Arab world requiring financial aid, said Dr Jassim Al Mannai.
"Based on what's happening in Egypt and Tunisia, we would expect [they] will need further financial assistance, and we would be ready to help," he said.
Talks have already taken place between the AMF and Egypt's finance ministry and central bank in recent weeks about the country's financial position.
Both Egypt and Tunisia have already received assistance from a range of global donors. Last month, Egypt declined an offer of financial aid, totalling $3bn, from the IMF and World Bank, indicating it would prefer to turn to Arab states to help to fill a budget shortfall of between $10bn and $12bn.
Dwindling tourism revenues and declining foreign reserves mean Egypt's budget deficit has swollen to 8.6 per cent of GDP.
Tunisia has also been hit hard by a reduction in tourism revenues, and last month the country delayed plans to tap international bond markets.
The AMF, based in Abu Dhabi, provides soft loans and technical macroeconomic assistance to its 22-member countries across the Arab world.
Currently, the majority of the AMF's funding comes from its members. But the fund could boost its capital if required by increasing the financial contribution of shareholder countries, converting more of its reserves into capital or issuing a bond, said Dr Al Mannai.
"We didn't borrow from the market, but if the lending activity continues to increase we will consider different options to increase our own resources in order to cope with any further potential increases in the future," he said.
The AMF supplied about $540m in loans last year.
