By Doaa Farid
Kuwait will allow Egypt a five year period rather than an initial one year to return the $2bn deposit it has given the cash-strapped government, Prime Minister Hazem El-Beblawi said in a televised interview on CBC on Sunday.
“Kuwait has accepted our request to extend it,” he said.
Finance professor Alaa Mostafa said the longer the deposits will remain in the Central Bank’s (CBE) treasury, the more it will help the bank to take long term decisions, “not short term decisions in a rush.”
“This decision shows a positive sign for the economy,” he said.
However, he didn’t expect that Saudi Arabia and United Arab Emirates to make a similar decision “because this is a political decision and each country has its own calculations,” he said.
Kuwait was among the first countries to congratulate Egypt on ousting former President Mohamed Morsi on 3 July after the massive protests of 30 June. Kuwait, along with other Gulf countries, pledged a $4bn loan in the form of interest-free deposits, cash grants and petroleum products.
On 26 September, the CBE received the $2bn deposit form Kuwait.
The Gulf’s financial aid packages also included $4bn from Saudi Arabia and $3bn from the UAE, totalling $12bn in aid from the Gulf region.
Foreign reserves have been pushed after the influx of Gulf aid to reach their highest levels; the CBE announced that they have increased by $4bn to reach $ 18.9bn in August. The government announced earlier in August that Gulf aid will help reduce the 14% budget deficit.
El-Beblawi said that the aid received reminded him of what happened after the 1973 war, and added that the increase in the cash reserves reflects a state of optimism towards a stable economy.
El-Beblawi also addressed in his interview the return of a $2bn Qatari deposit: he stated that Qatar recalled its deposit after a “few weeks of the current government’s work” and added that he wasn’t convinced with Qatar’s reason for withdrawing it.
The CBE governor announced earlier in October that a $2bn deposit will be returned to Qatar in the coming months.
El-Beblawi also said that Emirati investments will resolve urgent problems. “they include short term projects as well in villages and slums not only long term ones,” he added.
Meanwhile, Finance Minister Ahmed Galal agreed earlier this month with the Emirati Secretary of State Sultan Ahmed Al Jaber to strengthen cooperation with the UAE in the fields of energy, investment, infrastructure, health insurance and public debt.
Al Jaber announced in a meeting with Galal, which was also attended by the Emirati Ambassador in Egypt, 22 new investment projects are to be implemented in the Egyptian market with Emirati funding.