Egypt seeks more financial assistance from Arabian Gulf allies

Egypt is involved in discussions with GCC neighbours about further financial assistance after receiving $7bn.

Egypt is in talks about further financial assistance from the GCC after receiving US$7 billion in funds from the UAE, Kuwait and Saudi Arabia, the country's central bank governor said yesterday.

The UAE had deposited $2bn with Egypt’s central bank and provided a further $1bn loan to the country, said Hisham Ramez. A further $4bn had arrived from Saudi Arabia and Kuwait, $2bn from each donor, he said on the sidelines of a gathering of Arab central bank governors in Abu Dhabi yesterday.

Asked if Egypt was seeking further funds, he said: “There are talks with the countries that are supporting us.”

Mr Ramez’s comments follow Egypt returning $2bn that Qatar had deposited with the central bank after talks soured about converting the funds into three-year bonds.

Qatar had provided Egypt $3bn in May, $1bn of which was converted into three-year bonds. But the remaining $2bn was handed back to Qatar after the Gulf country sought to postpone conversion of part of the funds into bonds.

Ties between Egypt and Qatar have weakened after the removal of the Islamist president Mohammed Morsi on July 3. Qatar had been a strong supporter of Mr Morsi’s government, pledging billions of dollars in funds.

In contrast, other GCC states were quick to offer support in the immediate aftermath of his departure. As much as $12bn was promised by the UAE, Kuwait and Saudi Arabia in the form of grants, loans and petroleum.

Already ailing in the wake of a revolution that deposed Hosni Mubarak from the presidency in February 2011, Egypt’s economy, has been further hit by unrest in the past three months.

Mr Ramez said Egypt had sufficient foreign currency reserves to cover four months of imports. Reserves rose by $34 million to reach $18.91bn last month, according to data released by the regulator this month.

But Mr Ramez stressed the importance of reviving the economy.

“Our resources are increasing,” he said. “Definitely the support we are getting from the Gulf countries is very important for us but we cannot live depending on this. We have to start moving our economy again. Confidence locally is coming back and [we are] seeing our resources increase.”

He said private sector credit growth was running at 9 per cent compared with a year earlier.