CAIRO - The United Arab Emirates has agreed to grant Egypt $1 billion and lend it another $2 billion, an Egyptian source said on Tuesday, throwing it a financial lifeline after the army ousted the country's Islamist president last week.

The source also said Saudi Arabia may lend Egypt another $2 billion, which he expected to be confirmed within two days.

Egypt's finances have been devastated by political and economic instability since the popular uprising that pushed Hosni Mubarak out of the presidency two and a half years ago.

The UAE's $3 billion was expected to be part of a larger financial package from the Gulf emirate, said the source close to the talks. The loan would be in the form of a deposit at Egypt's central bank, although the interest rate and maturity had yet to be finalized.

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