The United Arab Emirates has transferred $3 billion in promised aid to Egypt and another $2 billion from Saudi Arabia will arrive shortly, Egypt’s central bank governor told the state newspaper al-Ahram on Thursday.
Gulf Arab oil producers have promised aid packages worth $12 billion to Egypt since the overthrow of president Mohamed Mursi, throwing a lifeline to the most populous Arab nation.
Egypt has struggled to pay for imports since the 2011 uprising that pushed Hosni Mubarak out of the presidency drove away tourists and foreign investors, two of its main sources of foreign currency.
Since then it has run through more than $20 billion in reserves, borrowed billions from abroad and delayed payments to oil companies.
Hisham Ramez also said promised fuel aid from the Gulf Arab oil producers would reduce pressure on Egypt’s foreign exchange reserves by up to $650 million a month.
Ramez said the planned aid would lift Egypt’s battered foreign exchange reserves to more than $20 billion after falling by around $1 billion to $14.92 billion in June. There was no date yet for the promised $4 billion in aid from Kuwait, he added.
The first $2 billion from Saudi Arabia, which has promised a $5 billion aid package including energy products, would be a 5-year interest-free deposit, he said.
Last week, the United Arab Emirates said it would will provide a $1 billion grant to Egypt and a $2 billion loan as an interest-free central bank deposit.
The rise of Mohamed Mursi’s Muslim Brotherhood in Egypt since 2011 has unsettled most Gulf Arab states, including the UAE, which feared it would embolden Islamists at home.
Economists warn that the aid will be of only short-term value if Egypt does not use it to overhaul its finances.
The country’s budget deficit has also widened dangerously over the last few months, prompting Mursi’s government to take the risky measure of ramping up its direct borrowing from the central bank.
In the first five months of 2013 alone, the deficit nearly doubled from the previous year to 113.4 billion Egyptian pounds ($16.2 billion).