Egypt's finance minister, who has been negotiating with Gulf states for financial assistance, said on Sunday that Qatar had given a grant of $500 million to support the budget which has ballooned as a result of political turmoil.
Hazem el-Beblawi said last week he was negotiating with Saudi Arabia and the UAE for funds worth close to $7 billion. He also said he was considering International Monetary Fund financing that Egypt previously turned down.
Egypt's economy, which had been growing robustly before the popular uprising earlier this year, was hit hard by the protests, which prompted foreign investors to withdraw funds and saw major revenue sources like tourism suffer. "They transferred $500 million as a grant to Egypt," El-Beblawi told Reuters, adding that the Qatari funds had been transferred in the past week or so. "It is a grant for budgetary support," he added.
Egypt forecasts a budget deficit of 8.6 percent of gross domestic product in the financial year to June 2012. Economists say the estimate may prove optimistic. Khaled Al-Attiyah, Qatari minister of state for international cooperation, told Al Jazeera satellite channel late on Saturday that Qatar's aim was to offer direct support for the budget and loans at very low rates to deal with the immediate economic issues, as well as to offer investment. He mentioned two projects in port cities, one in Port Saeed and the other in Alexandria. "These two projects will provide hundreds of thousands of job opportunities," he said.
Egypt reached a $3.2 billion deal with the IMF earlier this year, but the previous finance minister opted in June not to move on with it, partly because the ruling military council did not want to build up debts. Yields on Egyptian treasury bills rose last month to levels last seen during the global financial crisis in 2008. They have since eased but traders have said Egypt needs external funding to prevent yields surging further.