In early March, Qatar announced that it had no plans to provide additional aid to Egypt. Qatar’s Finance Minister Youssef Kamal said his country did not intend to provide more financial support for Egypt in the foreseeable future.
In early March, Qatar announced that it had no plans to provide additional aid to Egypt. Qatar’s Finance Minister Youssef Kamal said his country did not intend to provide more financial support for Egypt in the foreseeable future.
“I believe Qatar’s decision is a consequence of the changing international positions, especially that of the US, following the Brotherhood’s miserable failure to run state affairs and its inability to provide basic needs for its citizens, including bread, diesel, and security. However, I do not believe this suspension means there is disagreement between the Brotherhood and Qatar, but it has come as an implementation of the international community’s desire, especially the American administration,” said Al-Ahram Al-Ektesady, newspaper editor-in-chief Dr. Hamdy Gamal.
On the other hand, Muhsen Adel, a finance expert and vice-president of the Egyptian Association for Financing and Investment Studies, said: “I do not believe that the decision is political; rather it is related to the nature of the economic situation of Egypt, especially at a time when Egypt has been looking for other alternatives to finance its budget deficit through international institutions. Besides, Egypt has not made any request for fresh credits or support from Qatar.”
The former IMF assistant managing director, Dr. Fakhry El-Fekky, believed that Qatar fulfilled its obligations and provided Egypt with US$5 billion, without linking the financial aid to the results of the IMF negotiations, to the contrary of other countries. “I think that Qatar has sent an indirect message to the effect that they want to give Egypt more aid and support, but all that depends on the security situation in Egypt and reaching an agreement with IMF, especially since there are Qatari sovereign funds and investors seeking to invest about US$18 billion in Egypt: 8 billion planned for investment in Suez Canal area, and 10 billion earmarked for Northern Coast Region development. But it is impossible for investors to pump their investments into Egypt in these times which are marred with political and security confusion,” he added.
Faltering economy
Egypt’s economy has been experiencing severe problems since the January revolution. Gamal said the Egyptian economy suffered severe crises which were not caused by suspension of aid, as financial assistance would not last forever, but by the Brotherhood’s economic policies which were dependent on loans and deposits by Qatar, Turkey or Saudi Arabia. “Egypt has reportedly asked for additional assistance from Libya and Iraq, which is viewed as an overstated demand for financial aid from neighboring countries,” he added.
Among the decisions that suggest severe stumbling, according to Gamal, is a decision taken by the Public Prosecutor, Counselor Talaat Abdullah, to impose an attachment on the assets of 21 top businessmen accused of stock market manipulation. The decision however was later revoked by court order, increasing investors’ concerns and prompting some international companies to withdraw their investments due to this severe confusion caused by the Brotherhood regime.
Adel agreed with Gamal’s opinion that the Egyptian economy was facing severe successive crises as a result of the consecutive political and security events. He criticized Qandil’s government for its mismanagement of the economic file, failure to realize the importance of identifying the hotbeds of corruption in economy and government administration, and role in producing and increasing the feeling of frustration among citizens, especially the youth. “These are reasons of failing to meet aspired expectations, which has consequently intensified the level of despair,” he explained.
Fifth time’s the charm
The suspension of Qatari assistance is not the only stumbling block facing the Egyptian economy at present. The IMF team, headed by the Middle East Director, Masoud Ahmed, visited Egypt for the fifth time in a row and held talks with senior Egyptian officials without reaching a final agreement or realizing tangible results. “IMF’s recent visit to Egypt came after the former offered the latter an emergency aid of US$750 million, which the government refused. Therefore, IMF’s visit aims to clarify the reasons of this refusal and review the economic program of Qandil’s government since it is required to continue the economic reform processes,” El-Fekky said.
El-Fekky believed that the government refused the aids for two reasons; the first was that Egypt’s attainment of the financial aid without the total credit implicitly meant that the government failed to persuade IMF and reach a final agreement with it, while the second was that that emergency assistance would not come with a certificate of confidence vis-à-vis Egypt’s economic status; consequently, Egypt would not get the donations and credits pledged by the European Union and a number of regional and international institutions whose precondition was that Egypt should basically conclude an agreement with IMF.
“Having found that the Egyptian street was turbulent, the security and political situation was unstable, and the elections were postponed, IMF decided to defer the credit for a short period of three to six months, and to provide Egypt with emergency support to save its deteriorating economy. Should Egypt insist on presenting its reform program for voting by IMF’s Board of Governors, it is more unlikely, under the dwindling support within the IMF, that Egypt will get the two-thirds votes. Consequently, Egypt will lose both the promised emergency aid and the US$4.8 billion credit,” El-Fekky added.
