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CORRECTED-Turkey to lend Egypt $1 bln at 0.6 pct interest-agency

Monday, 1 Oct 2012 | 3:17 PM ET

(Corrects interest rate to 0.6 percent)

CAIRO, Oct 1 (Reuters) - A $1 billion loan that Turkey has agreed to extend to Egypt will carry an interest rate of less than 0.6 percent and be repaid in five years with a three-year grace period, the Egyptian state news agency MENA said on Monday.

Turkey had also agreed to provide an additional $1 billion in financing for infrastructure projects, MENA quoted presidential spokesman Yasser Ali as saying.

Egypt has been seeking budget support from foreign governments and international financial organisations to help it plug a budget deficit of 11 percent of gross domestic product.

The government said a visit by an IMF negotiating team would be delayed until it finished drafting an economic reform programme.

The IMF team had been scheduled to visit Cairo by the end of September to negotiate a $4.8 billion dollar loan to offset the revenue hit from economic disruption since the popular uprising last year that ousted President Hosni Mubarak.

President Mohamed Mursi signed the loan agreement with Turkish Prime Minister Recep Tayyip Erdogan on Sunday after giving a speech at Turkey's ruling AK Party conference.

(Reporting by Patrick Werr; Editing by Ruth Pitchford)

((patrick.werr@thomsonreuters.com)(+20-2-2578-3290)(Reuters

Messaging: patrick.werr.thomsonreuters.com@thomsonreuters.net))

Keywords: EGYPT TURKEY/