Mulsim Brotherhood deputy helps secure crucial loan, saves Egyptian pound
Khairat El-Shater has helped secure a Qatari loan that will save the Egyptian pound
Egyptian President Mohamed Morsi has thanked Qatar's emir for speeding the delivery of the opening tranches of a $2 billion loan aimed at boosting Egypt's troubled economy.
The first instalment of $500 million has already been deposited in Egypt's central bank, the second is due to arrive this month.
The dates for the third and fourth installments have not been announced, but sources speaking to Ahram Online say they may be moved forward from the first quarter of next year to November and December.
"It was the intervention of Khairat El-Shater [the Brotherhood second-in-command] with his associates in Qatar that secured this advance [in delivery time]," a financial source not within the Brotherhood told Ahram Online.
El-Shater, a business tycoon whose fortune is thought to run into the billions, was the Muslim Brotherhood's first choice to run for the presidency.
But he was disqualified in spring 2012 after a court ruled his Mubarak era convictions for graft and money laundering -- generally thought to be politically motivated -- made him ineligible.
According to sources, El-Shater visited the Qatari capital Doha last week to meet "top officials" and arrange for the full payment of Qatar's loan to be made into the Central Bank of Egypt before the end of the year.
The same sources claim El-Shater solicited the help of Rachid Mohamed Rachid, a former minister of trade and industry under Mubarak who is believed to moving between various Gulf countries as he faces graft charges in Egypt, to lobby his extensive contacts in several Arab governments, including those of Qatar and Saudi Arabia, to seal the deal.
Egypt's foreign currency reserves have tumbled below $15 billion in the aftermath of the early 2011 uprising, with the central bank using funds to prop up the value of the Egyptian pound.
Now, however, insiders are warning of a gradual devaluation of the local currency.
"A US dollar will effectively be worth LE10 in a few months," said one official source, saying that measures were being made to avoid such a drop.
Egypt is currently negotiating a $4.8 billion loan with the International Monetary Fund, conditional on the government getting popular support for an economic reform programme.
Both government and IMF have denied claims that a devaluation of the currency is a prerequisite for the funding, but informed monetary and private sector sources say that such a move is "coming sooner or later."
"It is a question of when and how to do it; it is also a question of the tolerable rate of devaluation," said one private sector source.
"Some were strongly advising to begin devalulation before the end of this year, but politically speaking this decision cannot be made before the parliamentary elections or else the ruling Freedom and Justice Party would sustain a serious political loss."
Sources familiar with the details of El-Shater's visit to Qatar say that the advancement of the full Qatari deposit would help Egypt delay the devaluation decision.
It would also, they add, help Egypt in its negotiations with the IMF over the loan as it would -- to a very limited extent -- improve the country's hard currency deposits.
El-Shater’s next move, the same sources speculate, could be Saudi Arabia. An agreement for significant funding from the Kingdom could mean further expansion in Egypt's hard currency.
This, too, would probably also involve the help of Rachid Mohamed Rachid.
The president, an official source said, approved the move of El-Shater and his use of Rachid.
"It is not unusual for a head of state to use the capacity of the national entrepreneurs, he [Rachid] was extending a helping hand," the source said.
- Explain this, Mr. Erdogan: income of Turkey's richest 7.7 times that of poorest
- When it comes to business, introducing yourself is an art
- Why India is likely to re-emerge as the UAE's top trade partner
- What's really attracting high net worth individuals to living in the UAE?
- Forbes Middle East reveals names region's 200 most powerful women