São Paulo – Qatar announced on Tuesday (8) that the country should loan Egypt US$ 2 billion and donate another US$ 500 million to the country. The funds should be turned to helping the North African nation to control depreciation of the Egyptian pound and to balance the country’s accounts. The announcement was made by the prime minister of Qatar, Hamad Bin Jassem Al Thani, after a meeting with Egyptian president Mohamed Morsi.
According to the Associated Press, aid from Qatar to Egypt has totalled US$ 5 billion since August 2012. Morsi was inaugurated in July. The Gulf country had already transferred US$ 2 billion in loans and US$ 500 million in donations in the second half of last year.
The funds should be turned mainly to avoiding the continued depreciation of the Egyptian pound. On Tuesday, the Central Bank of Egypt sold dollars for 6.4185 Egyptian pounds. The depreciation of the country’s currency also results in reduction of foreign currency reserves, which, according to Egyptian authorities, are at US$ 15 billion, enough to cover three months of imports.
The economic situation of Egypt was affected by the popular protests that resulted in the ousting of former president Hosni Mubarak, on February 11, 2011. Morsi was elected in July 2012, but in November new protests took the streets of Cairo after the president increased his powers by decree and also against the country’s new constitution.
IMF
Apart from the loan to Qatar, Egypt should receive help from the International Monetary Fund (IMF). The IMF director for the Middle East and Central Asia, Masood Ahmed, visited Cairo last week. The US$ 4.8bn loan that Egypt requested from the organisation was approved in November, but was suspended at Egypt’s request in December, as it required tax hikes, which contributed to the popular protests. In a press statement, Ahmed said that the talks with Egyptian authorities have been productive.
“The IMF remains committed to support Egypt in addressing its increasing economic challenges and moving to a more inclusive model of economic growth through a socially-balanced homegrown program. I am encouraged by the authorities’ commitment to take steps necessary to achieve fiscal and external sustainability. Following our discussions today, and based on the work that is to be carried out, we agreed that an IMF technical team would visit Cairo in the coming weeks to resume discussions on possible IMF financial support,” says the press statement.
According to the site of Egyptian newspaper Al Ahram, the local market received the return to dialogue with the IMF well. The Cairo Stock Exchange EGX 30 index rose 1.23% on Tuesday and ended the day at 5,804 points. Of the 179 stocks traded, 99 were up, 58 were down and 22 were traded flat. The turnover was US$ 95 billion.
*Translated by Mark Ament
