Qatar throws Egypt US$2.5 bil. in currency aid
By Yasmine Saleh and Patrick Werr, ReutersCAIRO -- Qatar threw Egypt an economic lifeline on Tuesday, announcing it had lent the country another US$2 billion and given it an extra US$500 million outright to help control a currency crisis.
January 10, 2013, 12:04 am TWN
Political strife has set off a rush to convert Egyptian pounds to dollars over the past several weeks, sending the currency to a record low against the U.S. dollar and draining foreign reserves to a critical level.
The government said it expected an International Monetary Fund technical committee to visit Cairo in two to three weeks' time to resume talks on a crucial US$4.8 billion loan to plug balance of payments and budget deficits.
Qatar's handout appears to be another example of the Gulf state seeking to deepen its influence in a Middle East being reshaped by revolts that have unseated long-serving autocrats. Doha supported the uprising in Libya and remains a major backer of the revolt against Syrian President Bashar al-Assad.
The aid is a political and economic bonus for both President Mohammed Morsi and the Muslim Brotherhood, the group that propelled him to power in a June election.
It eases the pressure on Morsi to negotiate an IMF agreement that will require him to implement unpopular austerity measures. That will be a relief for the Brotherhood as it gears up for forthcoming parliamentary polls.
“There was an initial package of US$2.5 billion, of which US$0.5 billion was a grant and US$2 billion a deposit,” Qatari Prime Minister Sheikh Hamad bin Jassim al-Thani told reporters, referring to the aid it has provided since Egypt's uprising two years ago.
“We discussed transferring one of the deposits into an additional grant so that the grants became US$1 billion and the deposits doubled to around US$4 billion,” he said of the new aid after meeting Morsi.
Hamad added that the new Qatari grants and deposits with Egypt's central bank had all arrived. “Some of the final details with the deposits are being worked on with the technical people, but the amount is there,” he said.
Abdulkhaleq Abdullah, a political analyst in the United Arab Emirates, said Qatar viewed Egypt as a valuable strategic asset and had invested more in the most populous Arab nation than any other Gulf Arab state since a popular uprising overthrew former President Hosni Mubarak in February 2011.
“Qatar wants a solid regional ally in Egypt,” he said. “Along with Turkey, this allegiance or axis is fundamental to the regional role Qatar is trying to carve for itself.”
The Qatari funds should help tide Egypt over until the government can seal the IMF agreement that analysts view as vital to give the government credibility with the markets.
The IMF's Middle East and Central Asia director, Masood Ahmed, left Cairo on Tuesday after meeting Morsi the day before.