Qatar will increase its assistance to Egypt by buying US$2.5 billion (Dh9.18bn) of government bonds to help shore up its economy after the 2011 revolution, the Egyptian finance minister said.
Egypt's cabinet will discuss the debt offering and the company that will handle it next week, El-Morsi Hegazi said in an interview in Cairo yesterday. The gas-rich emirate has already provided $5bn of grants and central bank deposits to Egypt, and will continue to stand alongside the nation, the Qatari prime minister Sheikh Hamad bin Jassim Al Thani, said in Doha this week.
Qatar's assistance has given the Arab world's most populous country a financial cushion as it seeks a $4.8bn loan from the International Monetary Fund. Egypt's foreign reserves remain almost 60 per cent below their levels before the uprising that ousted former leader Hosni Mubarak from power. President Mohammed Morsi's government is seeking aid to bolster the economy as protesters take to the streets over his leadership.
"Basically they are recognising that Egypt is a very important country in the region," said Steffen Reichold, an emerging markets economist at Stone Harbor Investment Partners LP in New York. "Qatar is very much interested in keeping things as stable as possible and using some of their large resources to contribute to that."
The Egyptian government's domestic borrowing costs have been rising since Standard & Poor's cut Egypt's credit rating to the same junk level as Greece on December 24 on the political turmoil, and on December 30 the central bank introduced dollar auctions aimed at stemming the drop in reserves, stoking depreciation in the pound, which has weakened 8.2 per cent versus the dollar in the past year.
The economic situation in Egypt is "very serious" and the government needs to conclude a loan agreement with the IMF "as soon as possible," the US senator John McCain said in an interview yesterday in Cairo, where he is part of a delegation.
Egypt's real gross domestic product rose 1.96 per cent last year, up from growth of 1.78 per cent in 2011, the slowest pace since at least 1998. Economic expansion has averaged 4.81 per cent over the past 14 years.