$9 bn of Arab aid to forex reserves, $3 bn for strategic commodities: Finance Minister

Ahram Online, Thursday 25 Jul 2013

Egypt's interim Finance Minister Ahmed Galal says most of aid pledged by Gulf states will be used to boost foreign currency reserves

Finance Minister Ahmed Galal
Finance Minister Ahmed Galal (Photo: AO)

Of the aid recently pledged to Egypt by oil-rich nations Saudi Arabia, the United Arab Emirates and Kuwait, $9 billion will be used to strengthen Egypt's foreign currency reserves, which will ease pressure on the local currency, said new Finance Minister Ahmed Galal at his first press conference on Thursday.

Egypt's foreign reserves, which stood at some $36 billion in January 2011, have fallen to $14.9 billion in over two years of political turmoil, and the Egyptian pound has lost some 22 percent of its value against the dollar.

The minister added that the other $3 billion in aid, which was pledged to cash-strapped Egypt by its Arab neighbours following the overthrow of Islamist President Mohamed Morsi earlier this month, will be used to purchase strategic commodities.

Asked about Islamic sovereign bonds, or sukuk, and private-public partnerships (PPP), the minister said the government was committed to supporting the private sector and have it play an important role in the economy, but the role of these instruments in the coming period was yet to be determined.

In an attempt to broaden Egypt's investor base after two years which witnessed Egypt's sovereign credit rating plummet, a controversial bill allowing the state to issue sovereign Islamic bonds was signed into law by Morsi in May, after months of fierce debate around it.

Moreover, the sukuk programme got off to a seemingly bad start when Central Bank Governor Hisham Ramez Governor told reporters in late May that he had been unaware of the government's plans, announced a day earlier, to issue $12 billion worth of sukuk by early 2014.

On Wednesday, Reuters reported that Egypt aims to issue sovereign Islamic bonds early next year, which could help ease pressure on its public finances.The minister added that the government has officially LE2.5 billion for a 10 percent wage raise for civil servants, which number 6.2 million, which will be disbursed in August and apply retrospectively to July wages.

Short link: