Sisi prods UAE to secure financial assistance from Kuwait
Sisi prods UAE to secure financial assistance from Kuwait
Egypt has asked the UAE to pressure Kuwait and other GCC countries to commit billions of dollars to ensure the country a $12 billion loan agreed with the IMF.
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The IMF has said there will be no loan until Egypt secures $6 billion [Getty]
Egypt has asked the United Arab Emirates to pressure Kuwait and other Gulf Cooperation Council countries to commit billions of dollars to the north African country to ensure a $12 billion loan agreed with the International Monetary Fund is delivered.
Egypt and the IMF announced in mid-August a preliminary agreement for the loan spread over three years, which still needs approval from the IMF's board.
The IMF has said it will not consider the loan, however, until Egypt secures up to $6 billion in commitments from bilateral creditors. Saudi Arabia has already agreed to deposit $2 billion with Egypt’s central bank and the UAE $1 billion.
"The Egyptian regime has asked the UAE to convince Kuwait and other Gulf states to give loans to Egypt as deposits in the Central Bank of Egypt, that would allow it to receive the first tranche of the IMF financing deal," an Egyptian political source told The New Arab on Sunday.
The source, who spoke on the condition of anonymity, added that Egypt has turned to the UAE for help after being turned down by other monetary institutions because of the country's deep-rooted economic problems.
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Egypt has received billions of dollars from oil-rich Gulf states, especially Saudi Arabia, the UAE and Kuwait |  |
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| Egypt hopes the loan will usher in an economic turnaround [Getty] |
Egypt has received billions of dollars from oil-rich Gulf states, especially Saudi Arabia, the UAE and Kuwait, since President Abdel Fattah al-Sisi led a 2013 military coup that ousted an elected Islamist government.
Also on Sunday, a source in the Egyptian banking industry told The New Arab that there was a "strong trend" to devalue the Egyptian pound to between 11.9 to 12 pounds to the dollar before the Eid al-Adha holiday set to take place on 12 September.
The IMF has ordered Egyptian authorities to clamp down on the parallel market and create a unified market as one of the reforms promised in exchange for the loan.
With dwindling foreign reserves, the government has been propping up the currency at 8.88 pounds to the dollar, well below the black market price of around 12.6.
Last week, Egypt's parliament passed a law on value added tax, a key demand of the IMF in exchange for the $12 billion loan.
Under the new legislation, VAT will set at 13 percent for 2016-17 and 14 percent for the following fiscal year.
Egypt hopes the financing deal with the IMF will usher in a dramatic economic turnaround.
More than five years after its 2011 uprising - partly fuelled by economic disparities - that swept away veteran strongman Hosni Mubarak, the country is still reeling from the fallout.
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