|Fund's spending priority will be given to the less developed countries such as Sudan and Yemen [GALLO/GETTY]
In the wake of the economy-related unrest in Tunisia, Arab leaders are expected to commit to a proposed $2bn programme to boost faltering Arab economies.
The pledge was made in a document obtained by The Associated Press news agency. The document is expected to be adopted by the economic summit opening on Wednesday in Sharm el-Sheikh, Egypt.
This is "a commitment to provide job opportunities for young Arab people in order to empower them to participate fully in their societies," stated the the summit's final statement document.
The idea of the fund was first suggested by Kuwait during the economic summit in the Gulf emirate in 2009.
But it has been slow to get off the ground like many Arab League initiatives requiring members to pledge money.
However, the economic aspect of the Tunisian revolt, which is mirrored in other countries in the region, may add to the urgency of taking measures to alleviate poverty in the region.
Arab diplomats said oil-rich Saudi Arabia and Kuwait have promised to pay $500mn each and additional pledges are pouring in.
Thamer al-Anni, an Arab League official, said nearly $298mn in additional pledges were made by 11 other member states on Tuesday.
He said a special fund would be set up within weeks, after a two-year wait to operate as a bank that provides short and medium-term loans to young Arabs who want to start small businesses.
"This will be for businesses with a small capital around $20,000-$50,000," he told AP.
He said priority will be given to the less developed countries such as Djibouti, Sudan and Yemen.
"All these projects will increase employment and achieve stability in the Arab societies," said Ahmed Aboul Gheit, Egyptian Foreign Minister, responding to a question about the impact of the Tunisian situation on the region.
The unrest started after a 26-year-old unemployed man in Tunisia set himself on fire last month in protest.
The incident sparked a tidal wave of protests that eventually toppled Ben Ali.
The death has sparked a rash of copycat attempted suicides in Algeria and Egypt, where several men set themselves on fire on Monday as foreign ministers met to prepare for the summit.
One of the Algerians who set himself ablaze died from his burns on Saturday and one Egyptian also succumbed to his injuries on Tuesday.
Thousands have also demonstrated in Jordan, Egypt, Oman, Libya and Yemen recently over the economic situation, some explicitly in solidarity with the Tunisians.
Al Jazeera's correspondent, Rawya Rageh reported from Sharm el-Sheikh that Hosni Mubarak, Egypt's president convened the second Arab Economic Summit.
In his speech, he did not mention Tunisia even once and focused purely on economic development and co-operation with a mention of the peace process, saying 'peace is coming despite the maneuvers of the occupation.'
The emir of Kuwait, the outgoing chair, said that his country was following what is happening in Tunisia closely and wished the Tunisians well in overcoming "this critical stage."
"The strongest words came from Amr Moussa, Arab League secretary general, who told Arab leaders that what happened in Tunisia was a result of the region's faltering economies," our correspondent added.
He told the gathering that Arabs have been "crushed by poverty and unemployment" and warned that what happened in Tunisia was "not far from the rest of us."
Oil-rich nations in the Gulf are taking precautions.
Sheikh Sabah al-Ahmed al-Jaber al-Sabah, Kuwait's ruler decreed on Monday that free food rations be given to all Kuwaitis at a cost of $818 million.
He also ordered the government to give every Kuwaiti citizen a grant of about $4,000.
Saudi King Abdullah also promised to increase government spending in the coming years.
He told a Kuwaiti newspaper on Monday that Saudi Arabia, the world's largest oil supplier, plans to spend $68bn next year on projects to reduce unemployment and spur growth.