Central Bank of Egypt (CBE) Governor Hisham Ramez said that Egypt has repaid a deposit worth $2.5bn to Qatar on Friday based on a formal request from Doha.
In televised remarks on CBC, Ramez confirmed the repayment. Egypt also repaid a deposit worth $500m last month.
However, Ramez downplayed any negative impact on the foreign currency reserves after paying back the Qatari deposit, based on his optimism regarding the anticipated fruits of economic reform undertaken in recent months. These efforts have included subsidy reform, tax increases, and legislative review targeted at attracting Arab and foreign investments.
Following the payment made to Qatar on Friday, the total amount of deposits paid back to the country have reached $6bn out of total a total of $6.5bn. The remaining $500m owed to Qatar is set to be paid back by the second half of 2015.
Former assistant executive director of the IMF Fakhry Elfiky said: “Repaying the Qatari deposit is a positive indicator of Egypt’s ability to adhere to repayment in a timely manner, and reveals officials’ confidence in the recent economic reforms which are expected to improve economic indicators and accelerate the pace of economic recovery.”
“Repaying the Qatari deposit worth $2.5bn reduces the pressure on foreign debt, the main element that international institutions rely on to produce a credit rating for the Egyptian economy,” he added. “[This] means that we are waiting for a better credit rating soon, which will benefit Egypt’s plans to borrow money from international markets at a lower costs to repay debts owed to international oil companies.”
Relations between Cairo and Doha deteriorated last year after the Egyptian military deposed president Mohamed Morsi, a Muslim Brotherhood member, following mass protests against his rule.
Qatar has expressed support for the Muslim Brotherhood in the past, and provided Egypt $7.5bn in grants and deposits during the year Morsi was in power.
Following Morsi’s ouster, Saudi Arabia, the UAE, and Kuwait sent billions of dollars in aid to Egypt.