Baghdad rejects Egyptian financing request

Published March 31st, 2013 - 08:21 GMT
An Iraqi official has confirmed Baghdad  rejected a request from Egypt for a $4 billion bond to be deposited in Egypt’s central bank
An Iraqi official has confirmed Baghdad rejected a request from Egypt for a $4 billion bond to be deposited in Egypt’s central bank

An Iraqi official says Baghdad has rejected a request from Egypt for a $4 billion bond to be deposited in Egypt’s central bank to bolster its faltering economy.

The official said on Friday that it’s "too risky" to deposit such a large sum in Egypt but that talks are continuing for a smaller amount. The official didn’t elaborate. He spoke on condition of anonymity because he wasn’t authorized to talk to the media.

In Egypt, the presidency’s media office confirmed in a statement to The Associated Press that discussions with Iraq are ongoing.

Egypt’s planning minister, Ashraf el-Araby, visited Iraq this week.

Egypt has sought help from several oil-wealthy Arab countries to shore up reserves in its central bank, which were depleted in the aftermath of Hosni Mubarak’s 2011 ousting.

Egypt has sought help from several oil-wealthy Arab countries after the central bank’s foreign currency reserves have tumbled to $13.5 billion as an aftermath of Hosni Mubarak’s 2011 ousting, covering little more than two months’ imports, as tourism and investment have diminished. So the central bank is rationing U.S. dollar supplies in auctions, making it hard for firms to get hold of dollars through the banking system.

It is not yet clear how much imports have been hit by the hard currency shortage, which has become more serious in the last three months. According to the most recent official data, imports rose to $16.4 billion in the final three months of 2012 from $14.6 billion a year earlier, but the increase was essentially due to higher costs for importing energy.


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