- Economy has been struggling with `historic' dollar shortage
- Funding comes as President El-Sisi faces growing discontent
The United Arab Emirates has pledged $4 billion to Egypt, with half to be allocated for development and half deposited in the country’s central bank to shore up its foreign-currency reserves.
The funding was announced at the end of a visit to Egypt by Abu Dhabi Crown Prince Mohamed Bin Zayed Al Nahyan, the U.A.E.’s state-run WAM news agency reported. Tarek Fayed, deputy governor at Egypt’s central bank, said the deposit should be received “in the coming week” and that it would also support the bank’s efforts to tackle currency speculation on the black market, Egypt’s state-run MENA news agency reported.
Egypt’s economy has struggled since the 2011 ouster of former President Hosni Mubarak, and while foreign reserves have been holding steady at about $16 billion, the country is facing a dollar shortage of "historical proportions," the Al Shorouk newspaper cited Finance Minister Amr El-Garhy as saying this week. Government efforts to quash the currency black market and encourage more investment by devaluing the pound have also had little effect.
Money changers in North Africa’s biggest economy were selling dollars at 11.47 Egyptian pounds each, a record 29 percent premium to the official rate of 8.8 pounds, according to a Bloomberg survey on Wednesday of eight dealers who asked not to be named because their prices violate central bank rules. That surpassed the 24 percent gap that existed before the biggest devaluation of the pound in 13 years on March 14.
The U.A.E. funding also comes as Egyptian President Abdel-Fattah El-Sisi faces growing dissatisfaction over his economic policies, three years after he led the widely-sought ouster of predecessor Mohamed Mursi and the subsequent crackdown on his Islamist allies. Thousands took to the streets last week to protest his decision to return two Red Sea islands to Saudi Arabia in the harshest popular outpouring against him to date.
It was unclear whether the U.A.E. support referred to the aid and investment promised at a meeting of Gulf nations in Sharm El-Sheikh in March 2015, Egypt’s official Ahram Gate said on Friday. Saudi Arabia, Kuwait and the U.A.E. each pledged $4 billion at the meeting, including a total of $3 billion of deposits in Egypt’s central bank.