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April 10, 2013 6:50 pm
The announcement came after an unexpected trip this week by most of the Egyptian cabinet to the Qatari capital, Doha, after signs of discord emerged between the two countries, partly over a stalled banking deal.
In a sign that the rift was healing, Sheikh Hamad bin Jassem al-Thani, the Qatari prime minister, spoke of “the importance of relations between Egypt and Qatar continuing at the same pace and at the same momentum” during a press conference announcing the aid package.
Mr bin Jassem said the latest round of financial support would be provided within days either as a deposit in Egypt’s central bank or purchases of Treasury bonds. Egypt’s main stock index remained flat on the news, dipping slightly after falling 5.7 per cent so far this year.
Qatar has already given Egypt $5bn in financial aid since the 2011 revolution that ousted Hosni Mubarak. Amid signs of frustration with the competence of Cairo’s new Islamist leaders, the Qatari finance minister, Youssef Kamal, said a month ago that no new aid for Egypt was imminent. Egyptian regulators have also held up a deal by Qatar’s state-owned QInvest to buy a controlling stake in EFG-Hermes , Egypt’s largest investment bank.
“The announcement of additional Qatari support . . . was unexpected, and contrary to public statements,” Raza Agha, chief economist for the Middle East and Africa at VTB Capital in London, said in a note. “Regardless, it is positive and gives the government more space.”
Egypt’s public finances have deteriorated significantly since the revolution which began an era of political turmoil. Foreign currency reserves have fallen 63 per cent, from $36bn, before the uprising to $13.4bn at the end of March. The country’s budget deficit is widening and its credit rating continues to drop.
The government of Mohamed Morsi, the president, has been trying to secure a $4.8bn loan from the International Monetary Fund as well as financial aid from other oil-rich Arab countries. The loan would unlock budget support and aid from other countries and international organisations.
The Qatari cash infusion could strengthen Cairo’s bargaining position in its talks with the IMF, which wants Egyptian officials to reduce food and energy subsidies and raise taxes as a condition for the loan package.
Mr bin Jassem also said his country planned to export natural gas to Egypt to help it meet anticipated an summertime energy crunch, expand Qatari investment in Egypt and ease restrictions on Egyptian companies operating in Qatar.
“We’re not asking for anything in return from the Egyptian government for our support,” said Mr bin Jassem.
Despite the financial aid, many Egyptians are suspicious of Qatar’s motives in helping their country. They accuse Qatar of trying to influence Egypt politically by supporting Mr Morsi’s Islamist-dominated government and flooding the airwaves with news channels that support its political line.
Egyptian comedian Bassem Youssef’s popular satirical television show El Bernameg, last week featured an elaborate song lamenting Qatar’s influence over the country to the tune of an old Arab nationalist hymn.
“Unfortunately, the media takes anything positive and turns it into something negative,” Mr bin Jassem said. “But this won’t affect Qatar’s dealings with our brothers in Egypt.”
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