BREAKINGVIEWS-Timing key for Qatar's $2.5 bln lifeline to Egypt

Una Galani
Reuters Middle East

(The author is a Reuters Breakingviews columnist. The opinions

expressed are her own.)

DUBAI, Jan 9 (Reuters Breakingviews) - Timing matters for

Qatar's $2.5 billion lifeline to Egypt. The generous aid package

doubles the Gulf state's financial assistance to the country and

underscores Doha's support for the Muslim Brotherhood-led

government. It's unclear, though, exactly when the funds were

received. Egypt might be in deep trouble, or sighs of relief

could be in order.

The country is at risk of a full blown currency meltdown.

The pound has fallen 5 percent against the dollar since Dec. 30.

While official data showed that foreign reserves held steady

during December, the central bank was sufficiently worried to

announce that the amount had reached a "critical limit". It

introduced foreign currency auctions and fresh capital controls.

Qatar's Prime Minister Sheikh Hamad bin Jassim al-Thani

added fuel to the fire yesterday by asserting that, "We don't

announce except after doing". Egypt's financial experts are

wondering if that means the emirate's funds actually reached

Cairo in December. The early arrival of the extra dollars would

help explain why foreign currency reserves held steady during a

month of constitutional crisis and rampant fear of political


However, if the government received the full $2.5 billion in

December, on top of a separate $500 million aid inflow from

Qatar, and reserves did not rise from the $15 billion in

November, then Egyptians must have been rushing to get their

hands on dollars. The possibility is alarming. If citizens are

scooping up dollars, the government might have trouble making

January's external debt payments, including $700 million to the

Paris Club.

The hope is that Qatar's aid has just arrived, in January.

That would mean that funds are still readily available to the

Brotherhood. Having a limited backstop to the currency will ease

the pressure on the government to make unpopular reforms ahead

of elections and give it room to finalise a critical $4.8

billion loan from the International Monetary Fund.

For the moment, though, there is only confusion about just

how well funded Egypt really is. The doubts make it harder for

outsiders to deal with the Islamist government which Qatar wants

to support. More transparency would be helpful for everyone.


- Qatar said on Jan. 8 that it had lent Egypt another $2

billion and given it an extra $500 million outright.

- The government said it expected an International Monetary

Fund technical committee to visit Cairo in two to three weeks'

time to resume talks on a $4.8 billion loan.

- "There was an initial package of $2.5 billion, of which

$0.5 billion was a grant and $2 billion a deposit", Qatari Prime

Minister Sheikh Hamad bin Jassim al-Thani told reporters,

referring to the aid it has provided since Egypt's uprising two

years ago.

- "We discussed transferring one of the deposits into an

additional grant so that the grants became $1 billion and the

deposits doubled to around $4 billion", he said of the new aid

after meeting Mursi.

- Hamad added that the new Qatari grants and deposits with

Egypt's central bank had all arrived.

- "Some of the final details with the deposits are being

worked on with the technical people, but the amount is there",

he said.

- The Egyptian pound has fallen around 5 percent against the

dollar since Dec. 30 to 6.48.

- Reuters: Qatar throws Egypt $2.5 bln lifeline to prop up


- For previous columns by the author, Reuters customers can

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(Editing by Edward Hadas and Sarah Bailey)

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