Qatar Mulls Boosting Assistance to Egypt

Qatar is considering boosting its assistance to Egypt through increasing its deposits at the Egyptian Central Bank, and by granting Egypt an additional $500 million, Qatari Prime Minister Sheikh Hamad bin Jassim Al-Thani said. Al-Thani met Egyptian President Mohamed Morsi and Prime Minster Hisham Qandil during his visit to Cairo. As part of its assistance to Egypt's struggling economy, the oil-rich state granted Egypt $500 million in October 2011 and deposited $2 billion in the Central Bank of Egypt in the fourth quarter of 2012.

The Qatari PM described his country's assistance so far as an "initial package of $2.5 billion" confirming that all promised deposits have already arrived in Egypt. He also spoke of possible increases to the package. "We discussed transferring one of the deposits into an additional grant so that the grants became $1 billion and the deposits doubled to around $4 billion," he was quoted as saying by Reuters in a press conference, following his meeting with the Egyptian president.

Egypt is currently in talks with the International Monetary Fund (IMF) to secure a $4.8 billion loan for budgetary assistance. The government says that the loan in essential as a seal of approval that would unlock further loans and grants from international institutions. A technical team is expected to arrive in Cairo in the next two weeks to work out the details. Meanwhile, the Egyptian pound dropped to a new low on Tuesday, reaching LE6.45 to the US dollar in a central bank auction. The dollar is currently traded at around LE6.53 in local banks and currency shops.

The pound has lost some 10 per cent of its value since a popular uprising ousted president Hosni Mubarak early in 2011. The Central Bank of Egypt (CBE) has shielded the pound against sharp devaluations in the past two years using up its once extensive reserves. CBE announced on 30 December it would adopt a new currency regime where it periodically auctions US dollars to local banks. The new regime is aimed at helping conserve the country's foreign currency reserves which the bank said have fallen to "critical levels." Reserves currently stand at $15 billion, enough to cover 3 months-worth of imports. The pound has lost some 4.6 per cent of its value since the new regime was adopted.