Sunday, July 28, 2013

Egypt Under Military Rule Pledged Billions by Gulf States

Egyptian pound value rises following influx of aid from Gulf

Ahram Online, Thursday 25 Jul 2013

Egyptian pound strengthens against dollar following $5 billion aid deposit by Gulf states in Central Bank

Egypt has seen its local currency strengthened against the US dollar in the past few days, as a result of the $5 billion deposit from the oil-rich Arab Gulf States in the Central Bank of Egypt (CBE), Ahram Arabic news website reported.

The Egyptian pound is at an official average of 6.95 to the dollar, according to the CBE website, as American currency has dropped by 0.7 percent after averaging LE7 in mid-June.

The currency rose after the CBE’s governor Hisham Ramez told Ahram Arabic news website last week that Egypt’s net international reserves (NIR) had risen to reach more than $20 billion due to the recent aid from the United Arab Emirates (UAE) and Saudi Arabia.

The deposit at the CBE is part of $12 billion in aid that has been pledged by Kuwait, Saudi Arabia, and UAE after the ouster of the Islamist President Mohamed Morsi by the military.

Al-Ahram also reported on Thursday that the American dollar has fallen back to the black market record of LE7.10, compared to LE8 in April.

Egypt's foreign reserves, which stood at some $36 billion in January 2011, have fallen to $14.9 billion over two years of political turmoil, and the Egyptian pound has lost 22 percent of its value against the dollar.

CBE has continued its foreign exchange auctions since the end of December 2012 to help stave off a currency crisis and thwart a run on the pound.

IMF freezes talks with Egypt, awaits international recognition of interim government

Reuters, Thursday 25 Jul 2013

Deputy spokesman confirms contact with Egypt is on technical level, loan talks will not resume until international community recognises interim government

The International Monetary Fund said on Thursday it will not engage in talks about a possible $4.8 billion loan to Egypt until the country's interim government gains recognition from the international community.

IMF deputy spokesman William Murray repeated that the Fund has not been in touch with the current government in Egypt, only with bureaucrats on the technical level.

"It's a case of the international community ... its institutions, its nations, coming together and recognizing a particular government," Murray told reporters on Thursday. "That would be true anywhere.

"And until that happens, and until our members make a decision on the Egyptian government, we're going to keep our context technical (at the technical level)."

The IMF had been negotiating a critically needed $4.8 billion loan with Egypt before the military removal of elected President Mohamed Mursi in early July.

The current Egyptian cabinet as a whole has not yet said clearly whether it will resume talks with the IMF about the loan, which would come attached to economic reform commitments that the government might find politically risky.

Planning Minister Ashraf al-Arabi said last week that now was not the right time to restart negotiations with the IMF because $12 billion in aid from Saudi Arabia, the United Arab Emirates and Kuwait would carry Egypt through its transitional period.

The next parliamentary elections are expected in about six months, but any transition could be delayed by radical reforms of the budget system that hurt living standards and bring protesters back into the streets.

After a year of Mursi's administration, Egypt's fiscal position is desperate; in recent months government revenue has covered barely half of all expenditure, leaving borrowing and aid to make up the rest.

An IMF loan is widely viewed as necessary to convince foreign donors and investors that Egypt's economy is on the right track.

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