Libya is to give cash-strapped Egypt $2bn and speed up visas for thousands of labourers seeking to work in the oil-rich country, said Egyptian and Libyan officials on Monday.

A spokesman at the Libyan central bank said authorities in Tripoli had agreed to release the money in the “next few days”. An Egyptian official also confirmed the impending transfer.

“This is a deposit that is meant to be a long-term investment because we want to strengthen the relations between Libya and Egypt,” said the spokesman, who asked that his name not be published because of the sensitivity of the issue. “We must not forget that Libya’s national security is very closely related to Egypt’s national security. We want to help Egypt’s government and economy.”

Egypt’s reserves have drained to perilously low levels since its 2011 revolution and it has struggled to balance its books. At the end of February the reserves stood at $13.5bn, down from $36bn just before the 2011 revolution that overthrew the regime of President Hosni Mubarak.

Millions of Egyptians worked in Libya before the Gaddafi regime was overthrown and their remittances were an important source of foreign currency. A Libyan official in Egypt said the ambassador had been ordered by Tripoli in recent days to speed up visas. Hundreds of Egyptians gathered in front of the Libyan embassy in Cairo on Monday to apply for visas.

Word of the impending cash transfer came as Egyptian authorities agreed to arrest and begin extradition proceedings for several loyalists of former Libyan leader Muammer Gaddafi, although Egyptian and Libyan officials denied the two matters were related.

The $2bn “is absolutely not related to the handing over” of the former Gaddafi loyalists, said the Libyan central bank spokesman. He said the negotiations over the deal “are being conducted at the highest possible levels” in both governments.

Large sums of money lie at the heart of lingering tensions between Egypt and Libya. Gaddafi invested hundreds of millions of dollars in Egyptian businesses and real estate, which Libya has been struggling to track and recover.

Despite the denials, analysts suspect an implicit or explicit deal between the governments of prime minister Ali Zidane in Tripoli and Egypt’s President Mohamed Morsi, who is a former leader of the Muslim Brotherhood.

“What the Muslim Brotherhood did was what the Libyan authorities wanted for a long time, but they did it at a price,” said Ziad Akl, a researcher and Libya specialist at the Ahram Centre for Political and Strategic Studies in Cairo.

The Egyptian public prosecutor Talaat Abdullah announced on Sunday that Egypt would begin extradition proceedings against Muhammad Mansour Gaddafi and Ali Mohammad Marya, both former Gaddafi regime officials. Days earlier, Egyptian police raided the central Cairo home of Ahmad Gaddafi-dam, a cousin of the late Libyan leader who oversaw his business dealings. He is also now facing extradition.

All three had been sheltering in Egypt since the Nato-backed armed uprising unseated Gaddafi in 2011. Egyptian officials say they sought and obtained guarantees of fair trials for the three suspects before agreeing to begin the process of handing the suspects over to authorities in Tripoli.

Libyan authorities asked the Egyptian authorities to freeze immediately “all funds registered in the name” of Gaddafi-dam, the official Libyan news agency reported.

Taha Bara, a spokesman for Egypt’s public prosecutor, said Libyan authorities had sent documents guiding Cairo officials towards assets registered in the name of Mr Gaddafi-dam and his relatives.

A committee had been formed to trace assets allegedly “stolen and looted” by Mr Gaddafi-dam and other former regime figures in Egypt, he said.

Get alerts on Egypt after Morsi when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article