Qatar delivers on $500m Egypt pledge

Egypt's finance minister says Gulf state has sent funds to help balance budget

(Photo for illustrative purposes only)

(Photo for illustrative purposes only)

Egypt has received a final $500m instalment of funds promised by Qatar and will get another $500m from Turkey at the end of January, its finance minister said, in the latest aid to help balance its budget and defend its currency.

Egypt has been facing a financial crisis as a month of political strife has cast doubts on the government's ability to push through unpopular spending cuts and tax hikes needed to persuade the International Monetary Fund to agree to a $4.8bn loan.

Finance Minister Mumtaz al-Saeed said on Saturday Egypt had received the final instalment out of a total of $2bn promised by Qatar, although he did not give a date.

"Egypt will receive the remaining $500m of the Turkish loan at the end of January," he added.

Egypt has spent more than $20bn in foreign reserves to support the Egyptian pound since the popular uprising that toppled Hosni Mubarak in early 2011.

Reserves fell by $448m in November to reach $15bn at the end of the month, equal to only about three months of imports.

The political turmoil has led to a run on the pound, with many investors and ordinary citizens rushing to convert into foreign currencies on concern the government might be forced to allow a sharp devaluation.

On Thursday, the central bank allowed the pound to weaken to an eight-year low of 6.188 to the US dollar.

Qatar said in August it would deposit $2bn with Egypt's central bank in four $500m instalments to help support the budget, and later that month Egypt said that it had received a first tranche.

Egypt said in October that Turkey had would lend it $1bn in two tranches, also for budget support, with one tranche coming in October and the second in January.

In June, before Mohamed Mursi of the Muslim Brotherhood was elected president, Egypt said Saudi Arabia had sent $1.5bn in budget support as part of a $2.7bn aid package.

"We are still negotiating the remainder of the Saudi aid package," Saeed said.

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