Qatar has agreed to lend as much as US$2 billion (Dh7.34bn) to Egypt in an effort to buoy the country's depleted finances and support an economy ravaged by 18 months of political turmoil.
The Arabian Gulf state will become the second country after Saudi Arabia to forward a big loan to Egypt without waiting for an agreement with the IMF as insurance.
Sheikh Hamad bin Khalifa Al Thani, the emir of Qatar, met the Egyptian president Mohammed Morsi on Saturday in the first trip by a GCC leader to Egypt since the Islamist leader was sworn in on June 30.
Gulf states have pledged billions of dollars in support to Cairo in the wake of the uprising that swept Hosni Mubarak from the presidency in February last year but the African country has complained little has come through.
While Mr Morsi's appointment of a technocratic government was viewed as an important step towards stability despite the unambitious choices for cabinet seats, investors see "risk at a tipping point", analysts at Pharos Holding in Cairo wrote in a note.
"Egypt is heading towards a bipolar outcome of either extreme recovery or another round of political struggle. We remain concerned over the absence of visibility on foreign financial support," the note said.
Some fears about the state of the economy have been allayed with the expected arrival of an IMF mission in Cairo this month to resume talks with the government over a proposed $3.2bn loan.
The IMF has demanded any loan has broad political support at home but political tensions and continued instability have delayed any agreement.
Egypt has instead turned to Gulf states and international banks to plug a budget deficit expected to jump 12.5 per cent to 135bn Egyptian pounds (Dh81.56bn) in this fiscal year, which began on July 1, according to a draft budget issued by the government last month.
The government is already struggling to fund a shortfall that has raised questions over Egypt's ability to meet demand for imports of basic commodities such as wheat and fuel.
The central bank's reserves have also fallen to critically low levels since Mr Mubarak was deposed and stand at $14.42bn compared with $36bn a year and a half ago.
Among the loans offered has been a $20bn aid package pledged from the G8, or the world's richest nations, to Tunisia and Egypt last year. In May, Saudi Arabia became the first country to lend to Egypt after it transferred $1bn to Egypt's central bank.
Egypt's planning minister at the time, Fayza Abul Naga, said "coordination was ongoing" with Saudi Arabia about the remaining $2.7bn aid package first discussed with the kingdom a year earlier.
