News / Middle East

Egypt Signals Qatar Loan Already Spent

Traders work at the Egyptian stock exchange in Cairo, January 3, 2013.
Traders work at the Egyptian stock exchange in Cairo, January 3, 2013.
Reuters
Egypt's central bank said on Thursday that a $2 billion loan from Qatar arrived in December, implying that the money had already been eaten up defending the currency before the foreign reserves crisis became public late last year.
 
News of the Qatari loan broke this week, and markets assumed that Egypt therefore had a cushion that would allow it to keep the pound's depreciation orderly, supporting Egyptian assets.
 
Political strife in late November and early December set off a rush to convert Egyptian pounds to dollars, sending the currency to record lows on concerns the government might devalue or bring in capital controls.
 
The central bank, which has spent more than $20 billion defending the pound in the two years since Egypt's popular uprising, said on Dec. 29 that its foreign reserves had reached a "minimum and critical limit".
 
It also announced a new currency regime as it struggled to stabilise the pound. But on Sunday the bank said foreign reserves had fallen in December by only $21 million, to $15.015 billion.
 
Qatari Prime Minister Sheikh Hamad bin Jassim al-Thani announced on Tuesday that Qatar had lent the country $2 billion and given it an extra $500 million outright.
 
Asked by email on Thursday if the deposit arrived in January or December, Nidal Assar, the bank's sub-governor for investment and foreign relations, replied: "December".
 
Analysts said that the Qatari deposit's arrival in December indicated that switching out of pounds and into dollars had been much greater than thought over the last few weeks.
 
"That shows the scale of dollarization in December and explains the shift to auctions on the part of the central bank," said Said Hirsh, an economist with Maplecroft.
 
Turning to the IMF
 
Egypt has been negotiating a $4.8 billion loan from the International Monetary Fund (IMF) to deal with the crisis and expects an IMF team to visit Cairo in two to three weeks.
 
The loan agreement was approved in principle in November, but political turmoil in December forced the government to delay a series of austerity measures deemed necessary to win the IMF board's final approval.
 
"Without Qatari aid, Egypt was on course for a full-blown financial crisis and, perhaps, a forced deal with the IMF by February," Hirsh said.
 
Egypt's ambassador to Turkey said Ankara had transferred $500 million into Egyptian coffers on Thursday, the Egyptian state news agency reported.
 
The pound weakened by 0.46 percent on the interbank market after a central bank auction of dollars on Thursday, the eighth such sale since it introduced a new regime to reduce pressure on its currency.
 
The pound has lost 11 percent since the uprising that removed President Hosni Mubarak in early 2011, half of it during the last two weeks. The central bank limits falls in the currency on the interbank market about 0.5 percent per day.
 
The bank sold $49.1 million at its daily currency auction on Thursday, bringing the total amount it has sold since it introduced the auction system on Dec. 30 to almost $520 million.
 
Economists and bankers said this drain on reserves is unsustainable.
 
Raza Agha, an economist with VTB Capital, said that if the $15 billion reseves number for December included the support from Qatar it meant that the political turmoil had pushed the central bank to spend $2 billion to support the pound and capital flight.
 
"It also suggests that January data is likely to show a decline in headline reserves," he said.

You May Like

Elusive Deal With Iran Could Yield Foreign Policy Legacy for Obama

A new Iranian leader -- and a strategic shift by the United States -- opens narrow window for nuclear agreement with Tehran More

Column: Saudi-Iran Meeting Could Boost Fight Against Islamic State

The fact that Iranians and Saudis are talking again does not guarantee a breakthrough, but it could make it easier to build a broad coalition against IS More

Thai Ruler Gives Top Cabinet Posts to Junta Inner Circle

Thailand's army chief has kept an iron grip on power as he extends the government, hand-picking an interim parliament that subsequently nominated him prime minister More

This forum has been closed.
Comment Sorting
Comments
     
by: ali baba from: new york
January 12, 2013 11:52 AM
any loan to Egypt is wasting because the economic crisis in Egypt is so severe and the Islamic approach will not ease the problem. investor lost the trust on moersi and his last word about Jew and describing them as a pigs and apes . this show moersi has not opened minded for change that badly needed to face that economic crisis. loan from IMF will not solve the problem . his lobbying to US for money should be denied. .

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
West Africa Ebola Vaccine Trials Possible by Early 2015i
X
Carol Pearson
August 30, 2014 7:14 PM
A U.S. health agency is speeding up clinical trials of a possible vaccine against the deadly Ebola virus that so far has killed more than 1,500 people in West Africa. If successful, the next step would be a larger trial in countries where the outbreak is occurring. VOA's Carol Pearson has more.
Video

Video West Africa Ebola Vaccine Trials Possible by Early 2015

A U.S. health agency is speeding up clinical trials of a possible vaccine against the deadly Ebola virus that so far has killed more than 1,500 people in West Africa. If successful, the next step would be a larger trial in countries where the outbreak is occurring. VOA's Carol Pearson has more.
Video

Video Survivors Commemorate 70th Anniversary of Nazi Liquidation of Jewish Ghetto

When the German Nazi army occupied the Polish city of Lodz in 1939, it marked the beginning of a long nightmare for the Jewish community that once made up one third of the population. Roughly 200,000 people were forced into the Lodz Ghetto. Less than 7,000 survived. As VOA’s Kane Farabaugh reports, some survivors gathered in Chicago on the 70th anniversary of the liquidation of the Lodz Ghetto to remember those who suffered at the hands of the Nazi regime.
Video

Video Cost to Raise Child in US Continues to Rise

The cost of raising a child in the United States continues to rise. In its latest annual report, the U.S. Department of Agriculture says middle income families with a child born in 2013 can expect to spend more than $240,000 before that child turns 18. And sending that child to college more than doubles that amount. VOA’s Deborah Block visited with a couple with one child in Alexandria, Virginia, to learn if the report reflects their lifestyle.
Video

Video Chaotic Afghan Vote Recount Threatens Nation’s Future

Afghanistan’s troubled presidential election continues to be rocked by turmoil as an audit of the ballots drags on. The U.N. says the recount will not be completed before September 10. Observers say repeated disputes and delays are threatening the orderly transfer of power and could have dangerous consequences. VOA correspondent Meredith Buel reports.
Video

Video Ukraine Battles Pro-Russia Rebel Assault

After NATO concluded an emergency meeting to discuss the crisis in eastern Ukraine, the country is struggling to contain heavy fighting near the strategic port of Mariupol, on the Azov Sea. Separatist rebels are trying to capture the city, allegedly with Russian military help, and Ukraine's defense forces are digging in. VOA's Daniel Schearf spoke with analysts about what lies ahead for Ukraine.
Video

Video Growing Business Offers Paint with a Twist of Wine

Two New Orleans area women started a small business seven years ago with one thing in mind: to help their neighbors relieve the stress of coping with a hurricane's aftermath. Today their business, which pairs painting and a little bit of wine, has become one of the fastest growing franchises across the U.S. VOA’s June Soh met the entrepreneurs at their newest franchise location in the Washington suburbs.
Video

Video Ebola Vaccine Trials To Begin Next Week

The National Institutes of Health says it is launching early stage trials of a vaccine to prevent the Ebola virus, which has infected or killed thousands of people across West Africa. The World Health Organization says Ebola could infect more than 20,000 people across the region by the time the outbreak is over. The epidemic has health experts and governments scrambling to prevent more people from becoming infected. Zlatica Hoke has more.
Video

Video Asian Bacteria Threatens Florida Orange Trees

Florida's citrus fruit industry is facing a serious threat from a bacteria carried by the Asian insect called psyllid. The widespread infestation again highlights the danger of transferring non-native species to American soil. VOA’s George Putic reports.
Video

Video Aging Will Reduce Economic Growth Worldwide in Coming Decades

The world is getting older, fast. And as more people retire each year, fewer working-age people will be there to replace them. Bond rating agency Moody’s says that will lead to a decline in household savings; reducing global investments - which in turn, will lead to slower economic growth around the world. But experts say it’s not too late to mitigate the economic impact of the world’s aging populations. Mil Arcega has more.
Video

Video Is West Doing Enough to Tackle Islamic State?

U.S. President Barack Obama has ruled out sending ground troops to Iraq to fight militants of the so-called Islamic State, or ISIS, despite officials in Washington describing the extremist group as the biggest threat the United States has faced in years. Henry Ridgwell reports from London on the growing uncertainty over whether the West’s response to ISIS will be enough to defeat the terrorist threat.
Video

Video Coalition to Fight Islamic State Could Reward Assad

The United States along with European and Mideast allies are considering a broader assault against Islamic State fighters who have spread from Syria into Iraq and risk further destabilizing an already troubled region. But as VOA State Department Correspondent Scott Stearns reports, confronting those militants could end up helping the embattled Syrian President Bashar al-Assad.
Video

Video Made in America Socks Get Toehold in Online Fashion Market

Three young entrepreneurs are hoping to revolutionize the high-end sock industry by introducing all-American creations of their own. And they’re doing most of it the old-fashioned way. VOA’s Julie Taboh recently caught up with them to learn what goes into making their one-of-a-kind socks.
Video

Video Americans, Ex-Pats Send Relief Supplies to West Africa

Health organizations from around the world are sending supplies and specialists to the West African countries that are dealing with the worst Ebola outbreak in history. On a smaller scale, ordinary Americans and African expatriates living in the United States are doing the same. VOA's Carol Pearson reports.

AppleAndroid