CAIRO: Bank of America said in a report released Monday that Egypt will need an additional $12 billion in aid from Gulf countries in order to keep its foreign monetary reserves stable in the upcoming fiscal year.
Following the ouster of President Mohamed Morsi, Saudi Arabia, Kuwait and the United Arab Emirates pledged to grant Egypt $20.8 billion, and have so far provided an estimated $18 billion, Al-Shorouq reported.
Eight billion dollars of the Gulf aid was transferred to Egypt as deposits in the Central Bank, $7 billion in petroleum shipments and $3 billion in grants.
United Arab Emirates Finance Minister Hamdan bin Rashid Al-Maktoum said Gulf aid to Egypt will total $21.3 billion by the end of the current fiscal year, but that the UAE does not intend to grant Egypt additional aid at the moment, Al-Yaum website reported.
Egypt’s financial obligations in the second half of the current fiscal year will include repaying $700 million to the Paris Club creditors group, repaying $500 million in Qatari deposits and $2.5 billion in Qatari bills, according to the Bank of America report.
“Borrowing or getting aid from the Gulf countries or other foreign countries is not a likely solution for keeping reserve stability, as the Gulf countries’ aid is a financial obligation that needs to be repaid,” Alia al-Mahdi, former dean of the Faculty of Economics and Political Science at Cairo University, told The Cairo Post .
She said Egypt should find other solutions to increase the foreign reserves through increasing direct and indirect investments, boosting tourism revenues and promoting exports.
Mahdi added that the next government should work to increase the foreign reserves to provide for the growing needs of citizens’ in oil, food and other products. She also praised the efforts of ousted President Hosni Mubarak and former Prime Minister Ahmed Nazif in accruing more than $40 billion in foreign reserves during their tenures.