Payment brings the amount Egypt has returned to Qatar to $6 billion, leaving $500 million outstanding
Egypt has paid back $2.5 billion that Qatar deposited with it to help prop up the Egyptian central bank's hard currency reserves, a central bank official said on Friday night, as the Qatari foreign minister arrived in Cairo for Arab League talks.
The payment brings the amount Egypt has returned to Qatar to $6 billion, leaving $500 million outstanding, which the official said would be paid back in the second half of 2015.
Qatar helped support the Egyptian economy in the aftermath of the 2011 uprising that overthrew Hosni Mubarak, but relations have soured since the ouster of President Mohamed Mursi of the Muslim Brotherhood last year.
Other Gulf countries have filled the void, with Saudi Arabia, the United Arab Emirates and Kuwait providing $10.6 billion in aid last fiscal year, Egypt's finance minister says.
A government source said earlier this month that Egypt had received another $1 billion grant from Kuwait.
Qatar, a small gas-exporting country which provided billions of dollars in grants, loans, and energy supplies to the Egyptian government under Mursi, asked that the central bank deposits be paid back earlier this month.
Qatari foreign minister Khaled al-Attiya arrived in Cairo on Friday night for a meeting of Arab League foreign ministers.
Qatar has had a fraught relationship with its Gulf neighbours and Egypt, partly because of Doha's alleged support for the Muslim Brotherhood, though relations have begun to thaw recently.
President Abdel Fattah al-Sisi, who led Mursi's ouster, has relied on political and economic support from Qatar's rivals in the Gulf, which support his crackdown on the Brotherhood that has seen hundreds killed and thousands jailed.
Egypt has been hit by more than three years of political and economic turmoil following the 2011 uprising.
The government is trying to strike a balance between cutting its deficit while reviving economic growth, which remains too slow to create enough jobs for a youthful population of 86 million.
In an effort to ease the burden on its swelling budget deficit and minimise its need for Gulf aid, Egypt's government has introduced a raft of long-delayed reforms in recent months including subsidy cuts and tax hikes.