Egypt is still in negotiations over a $3 billion loan from Qatar, with an interest rate of around 5 percent currently being discussed, Al Arabiya has learnt.
The loan, first announced on April 10, has not yet been received according to a source at Egypt's Central Bank, as the conditions of the package are still being discussed.
Negotiations are still ongoing regarding the interest and maturity date of the loan, which will be in the form of dollar bonds.
At around the same time as Qatar pledged the loan, Libya promised Egypt a loan of $2bn. That amount has now been received by the Central Bank, sources say.
The $3bn bond purchase was announced earlier this month by Qatar’s Prime Minister Sheikh Hamad bin Jassem al-Thani. It came over and above a previously announced aid package of $5bn that Qatar pledged to Egypt.
The $5bn pledge comprised an outright grant of $1bn and $4bn in bank deposits. Abdullah Shehata, advisor to Egypt’s finance minister, confirmed to Al Arabiya that of the $4bn loan, $2.5bn has been deposited in the form of dollar bonds with an interest rate of 4.25 percent, while $1.5bn has been deposited with the Central Bank.
Egypt is in desperate need of cash, after its foreign reserves plunged from $36bn to some $13.4bn in two years, amid a rising budget deficit. The country’s Central Bank is expected to give April reserve figures in the coming few days.
The country is still negotiating with the International Monetary Fund (IMF) over a $4.8bn loan accord, having failed to reach an agreement when a delegation from the IMF visited the country earlier this month.
A successful agreement on the IMF loan is expected to unlock additional funding of around $10bn from elsewhere.
But others have already warned that they may cancel pledges should the IMF deal not go ahead.
According to Mubasher.info, the U.S. may cancel $260 million of financial backing for Egypt if the IMF loan is called off. Egypt has already received $190m in backing from the U.S..
Egypt is unlikely to reach an accord on the IMF loan before the fourth quarter, EFG-Hermes said this week. The country needs to take unpopular moves such as cutting subsidies prior to a loan agreement being reached.
But IMF officials said they are still hopeful of a deal. The regional IMF representative Abdel Shakour Shaalan confirmed that a delegation from the IMF will visit Cairo next week to put the final touches on the loan agreement, said to be ready by the end of May.
He added that Egypt’s economic reform program will be reviewed every three months by IMF experts and that the Central Bank has agreed for an IMF delegate to remain in Cairo to carry out this review.
Egypt said yesterday in its budget statement that its economy is set to grow by 3.8 percent in the fiscal year starting in July.