Egypt’s central bank gets cash infusion from UAE

Sunday 28/08/2016
Central Bank of Egypt’s headquarters in Cairo.

London - The United Arab Emirates has deposited $1 billion in the Central Bank of Egypt, which is in the process of introducing significant austerity measures to revive its economy.
The deal signed by Director- General of the Abu Dhabi Fund for Development (ADFD) Moham­med al-Suwaidi and Egypt Central Bank Governor Tarek Amer comes as Cairo readies itself to meet Inter­national Monetary Fund (IMF) loan obligations.
“[The deposit] demonstrates the UAE’s commitment to support our long-term partners, ensuring their economic growth and stability and is a landmark agreement, which will make an immediate difference to the Egyptian economic system,” Suwaidi said.
IMF representatives and Egyp­tian officials reached a tentative deal that allows Egypt to receive $12 billion over a three-year period. In return, Cairo must reform the Egyptian economy.
A statement on the official UAE news agency said: “This support comes within the framework of strategic cooperation and coordi­nation between the two countries and out of the UAE’s unwavering stand in support of Egypt and its people to promote the develop­ment process, as well as the recog­nition of Egypt’s central role in the region.”
Egyptian economic expert Khalid al-Shafey said the UAE pledge would support the Egyptian government’s economic reform programme.
The $1 billion deposit into Egypt’s central bank, Shafey said, would “contribute to creating a state of decline in the price of the US dol­lar on the black market. It will also help, along with the approaching first instalment of the IMF loan, in pushing forward the overall recov­ery of the Egyptian economy”.
Observers said Gulf states are gambling on the recovery of the Egyptian economy and national security until it can return to its role as a major regional power, par­ticularly in light of regional forces, such as Turkey and Iran, interfer­ing in Arab affairs.
Egypt is suffering after-effects from the “Arab spring” on its economy and security. It is grap­pling with a dollar shortage and dwindling foreign reserves. The government has been preparing the Egyptian public for major eco­nomic reform measures, which will include cutting subsidies.
Egypt will cut fuel subsidies over the next three years and reduce spending on them by nearly 43% in the 2016-17 budget, officials con­firmed.
Egyptian President Abdel Fattah al-Sisi said officials have waited too long to implement essential eco­nomic measures and the future of the country was at stake.
“The size of the challenges is beyond imagination and the re­sponsibility for coping with them doesn’t fall solely on my shoulders but is a responsibility shared by Egyptians as a whole,” Sisi told Al- Ahram newspaper.
Under the conditions of the IMF loan, Egypt must secure $6 billion from bilateral creditors before the loan can be approved. The UAE was the first to pledge its support.