Egypt receives $2 billion Saudi deposit in IMF deal financing

Ahram Online , Thursday 13 Oct 2016

The deposit came despite fears that recent tensions between Cairo and Riyadh would see Saudi Arabia back away from supporting Egypt

Photo: Reuters

Egypt has received a $2 billion deposit from Saudi Arabia, an Egyptian Central Bank official said, moving closer to securing several billions of dollars needed to seal a prospective $12 billion loan.

The Saudi funds will help "boost the Central Bank's cash reserves," the official was quoted by state news agency MENA as saying, without elaborating.

The Egyptian government needs to secure $6 billion in bilateral financing for the first year of the three-year programme to seal the deal and get final approval by the IMF's executive board.

A recent spat between Cairo and its key financial backer Riyadh over a United Nations vote on Syria fueled doubts that the oil-rich kingdom would continue to support Egypt.

Earlier this week, Egypt voted in favour of a Russian resolution in the UN Security Council on Syria that removed the demand for a halt of Russian bombing of Aleppo stipulated in a rival French resolution that was supported by Saudi Arabia. Egypt voted also in favor of the French resolution.

Both resolutions failed to pass but Egypt's backingof the Russian draft resolution sparked tensions with Saudi Arabia, which has opposed Russia's support for Syrian President Bashar Al-Assad.

On Tuesday, Egypt’s oil ministry announced that it has contracted “other foreign suppliers” to provide the country with its petroleum needs for October after it was informed that the Saudi Aramco company would be unable to send the agreed upon quantities

Egypt needs the IMF loan to stimulate its flagging economy, rocked by political turmoil unleashed by the 2011 revolution, which has scared off investors and tourists.

A preliminary deal with the IMF on a major loan was reached in August.

President Abdel-Fattah El-Sisi has said the package will help boost international confidence in the country's economy.

The stock index has dropped 2.2 percent since Sunday on news that Saudi Aramco informed Egypt's state oil company that it would halt supply of refined oil products to the country. The central bank deposit news may reassure investors that Saudi Arabia is not abandoning support for Egypt.

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