QATAR TO THE RESCUE: Gulf state throws Egypt a $2.5 billion lifeline
"Qatar wants a solid regional ally in Egypt. Along with Turkey, this allegiance or axis is fundamental to the regional role Qatar is trying to carve for itself" says analyst
January 9, 2013 7:51 by Reuters
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 $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 aMiddle 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 Mohamed Mursi and the Muslim Brotherhood, the group that propelled him to power in a June election.
It eases the pressure on Mursi 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 $2.5 billion, of which $0.5 billion was a grant and $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 $1 billion and the deposits doubled to around $4 billion,” he said of the new aid after meeting Mursi.
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.
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.