Last updated: 8 January, 2013

Qatar raises financial aid to Egypt to $5 billion

Qatar said on Tuesday it will increase its financial aid to Egypt by $2.5 billion to a total of $5 billion, comprising an outright grant of $1 billion and $4 billion in bank deposits.

The financial lifeline comes as Egypt battles a currency crisis and seeks an IMF cash injection into its teetering economy of an almost equivalent amount.

Qatar’s Prime Minister Sheikh Hamad bin Jassim told a Cairo press conference that the gas-rich emirate had doubled its previously announced aid, which comprised $500 million as a grant and $2 billion in bank deposits.

“The sum is there,” Sheikh Hamad said.

The press conference came shortly after a government statement said it had “fruitful” discussions with a visiting IMF delegation.

An IMF team is expected within weeks for further talks after a delegation headed by the monetary fund’s Middle East director Ahmed Massood met with President Mohamed Morsi and other Egyptian officials on Monday.

The IMF, which was reported to have pledged $4.8 billion, “remained committed to supporting Egypt in confronting its economic challenges,” said a statement by Prime Minister Hisham Qandil on Tuesday.

The IMF “views the authorities’ determination on taking the necessary steps to achieve financial stability as encouraging,” the statement said, adding an IMF team will visit Egypt “in the coming weeks” for further talks.

Egypt had expected the IMF loan, which would provide crucial encouragement for foreign investors in the restive market, in December or January, but weeks of sometimes deadly street clashes and protests postponed the aid.

Morsi’s government has also temporarily balked at raising taxes and other measures of an economic reform programme in the face of simmering opposition ahead of parliamentary elections in two months.

Egypt’s currency has plunged to a record low over the past week as the Central Bank began auctioning dollars to preserve dwindling foreign reserves.