Egypt to discuss $2 billion aid from Algeria - paper

Egypt needs help from foreign donors to rein in its budget deficit and avert a balance of payments crisis until it can secure a $4.8 billion loan from the International Monetary Fund.

Two official sources confirmed to Reuters that Cairo was seeking aid from the fellow north African state although they said it was not clear what form the assistance would take. One said the amount in question was around $2 billion.

Newspaper al-Masry al-Youm did not give a direct quote from its source, but wrote that: "An official source said that Egypt will negotiate a deposit worth $2 billion to be put in the central bank and that negotiations that prime minister Hisham Kandil will do today with Algerian prime minister Abdelmalek Sellal will involve this subject."

It gave no indication if the money was to be a loan or some form of grant, or of any conditions attached.

Transfers from Saudi Arabia and Qatar since June have helped shore up state finances weakened by more than a year of economic turmoil since the overthrow of Hosni Mubarak in February 2011.

Strong demand for natural gas and relatively high world energy prices have helped Algeria add this year to a foreign exchange reserve pile that was worth more than $186 billion at the end of June.

The newspaper said Kandil's visit was also aimed at solving a shortage of butane cooking gas in Egypt, which counts Algeria among its top suppliers.

One Egyptian official told Reuters he understood that Egypt was seeking about $2 billion in assistance from Algeria but did not have details on what form the assistance would take.

Another official said Egypt was seeking support from Algeria and that it would likely be a topic for discussion during Kandil's visit. But he said the amount or form of any support was not determined.

(Reporting by Tamim Elyan and Edmund Blair; Writing by Tom Pfeiffer; editing by Patrick Graham)