x Abu Dhabi, UAE Thursday 20 July 2017

Egypt seeks help with $7bn deficit

Egypt hopes to receive assistance from other Arab states and the Arab Monetary Fund to help it meet its immediate financing requirements of about US$7 billion (Dh25.7bn).

Hazem El-Beblawi, Egypt's minister of finance, is interviewed by members of the media after the extraordinary meeting of the Council of Arab Ministers of Finance hosted by Abu Dhabi at the Emirates Palace yesterday. Andrew Henderson / The National
Hazem El-Beblawi, Egypt's minister of finance, is interviewed by members of the media after the extraordinary meeting of the Council of Arab Ministers of Finance hosted by Abu Dhabi at the Emirates Palace yesterday. Andrew Henderson / The National

Egypt hopes to receive assistance from other Arab states and the Arab Monetary Fund to help it meet its immediate financing requirements of about US$7 billion (Dh25.7bn).

Hazem El Beblawi, the finance minister, said the country needed to plug a budget deficit of about 9 per cent of GDP. He was speaking on the sidelines of an Arab finance ministers meeting in Abu Dhabi yesterday.

"There's an understanding of our needs and the international and regional financial institutions are ready to help and the Arab brothers have good intentions," he said.

The country's economy has been reeling since a popular uprising erupted earlier this year. Egypt's foreign reserves have since dwindled and tourism and other investment has not recovered.

"We need stability to return, which will provide reassurance to investors and help get things back to normal," he said.

Egypt has already received multibillion-dollar pledges of financial support from the UAE, Saudi Arabia and Qatar.

Mr El Beblawi said Egypt was also applying to the Arab Monetary Fund (AMF) for assistance. The AMF is expected to lend $500 million to Egypt and Tunisia to help rebuild their economies, Jassim Al Mannai, the director general of the fund, said in July.

For the time being, the country intends to finance its budget deficit for the current fiscal year by selling 120bn Egyptian pounds (Dh73.74bn) in domestic treasury bills, he said.

Foreign investors sold off 34.9bn pounds of Egyptian holdings in the first six months of the year to 24.5bn pounds, Central Bank data shows.

Instead, banks in the country have filled the shortfall, raising their investments.

Local-currency borrowing costs have surged for the government after foreign investor demand for Egypt's debt dropped after the unrest.

Egypt's finances remain under pressure.

The country's net foreign reserves dropped by $700m to $25.01bn last month from July, Central Bank figures released on Tuesday showed.

Unemployment in the fourth quarter of the fiscal year ending June 30 was 11.8 per cent, the country's statistics agency said yesterday.

 

tarnold@thenational.ae