Qatar’s decision to halt $2 billion in aid to Egypt is seen by many as political pressure from the wealthy oil state, which disapproves of Mohamed Morsi’s removal from power.
Qatar informed the Egyptian government Monday that it will postpone the second and the third tranches of the second installments of the Qatari bonds, a total value of $2 billion. The first tranche was supposed to be offered last August and the second in September.
Financial analysts consider Qatar’s decision to be political pressure on Cairo, due to Qatar’s position in support of Muslim Brotherhood. The analysts stressed the need for an urgent plan to revitalize the local economy without waiting for assistance from Qatar or any other source.
Qatar had announced financial assistance to Egypt with a total value estimated at $5.5 billion to support the deteriorating economy under the rule of the Muslim Brotherhood. The assistance was to be offered in the form of dollar bonds, and the first tranche was put up in May at a value of $2.7 billion through the Ireland stock exchange with an interest rate of 4.25%.
Financial analyst Salah Haider said if the news of postponement is proven accurate, it means the Qatari government will not convert the second and third installments of the aid, totaling $2 billion. The agreement had provided for the payment of value in return for the issuance of bonds, which did not happen and was postponed, which could postpone Egypt’s access to the previous amounts.
Haider said any attempts to put economic pressure on Egypt for political purposes are doomed to fail completely, as Egypt has economic fundamentals and structure that will allow it to revive from such an economic crisis faster than many expect.
Haider pointed out that remittances from Egyptians abroad hit a record high, exceeding $12 billion.
The head of Badr Investment Association, Alaa el-Saqty, said the delay would increase pressure on the Egyptian economy, which is expected to exceed the barrier of 200 billion EGP this year.
El-Saqty asked the Egyptian government to prepare an immediate plan for developing the economy to put Egypt on the right track, as Saudi Arabia and the Emirates are the only supporting countries for the economy, noting that their support alone will not be enough to solve the economic crisis.
The Qatari bonds were scheduled to be put within the national program of the former government to put indefinite dollar bonds worth $12 billion starting from last May and the use of revenue in bridging the budget deficit, a program that stopped after the June 30 demonstrations that led to Morsi’s ouster.
The governments of Saudi Arabia, the U.A.E. and Jordan, however, have declared their support to Egypt after the “June revolution,” pumping financial and in-kind aid in the form of petroleum products worth a total of $12 billion. This contributed in reducing the financing gap significantly.
Translated from Youm7.