He also announced a relaxation of part of Qatar’s sponsorship system, which requires foreign businesses operating in the kingdom to have a Qatari national sponsor. Egyptian companies will no longer be subject to that rule.
The announcement brings the total financial aid given by Qatar to Egypt to around USD 8 billion, which is comprised of grants, loans and deposits, including the USD 5 billion package that has been given incrementally since the 2011 uprisings.
Of that USD 5 billion, USD 4 billion was deposited in the central bank and will be used to buy treasury bonds. With the addition of the USD 3 billion treasury bond purchase announced on Wednesday, Qatar has purchased in excess of USD 7 billion of Egyptian government debt in support of the beleaguered government of president Mohamed Mursi.
The Egyptian government, along with companies operating in the country, has been seeking to import natural gas to supplement insufficient domestic production.
The Egyptian government states that its funding gap is estimated at USD 20 billion until the end of June 2015. It has so far obtained government aid from Qatar, Saudi Arabia and Turkey, estimated at a combined value of USD 10 ten billion.
Cairo is currently in negotiations with the International Monetary Fund over a loan worth USD 4.8 billion. The minister of planning and international cooperation, Dr. Ashraf El-Arabi, who is accompanying the Egyptian prime minister in his current visit to Qatar, stated that the Egyptian government is currently seeking an IMF of only $ 4.8 billion, but that amount could be raised in light of the budget deficit.
The Country Assistance always raises doubts among Egyptians, featured speculation about the existence of hidden intentions coveted behind that support. However, the secretary-general of the Federation of Arab Investors, Ambassador Gamal Bayoumi, told Asharq Al-Awsat that Qatar’s actions to assist Egypt sets an example, adding: “Qatar has truly proven that it is seeking to support Egypt, and what it is providing to Egypt and other Arab countries is not out of the ordinary [in terms of its own policies]; therefore, there is no justification for the attacks against it.”
He continued: “Aid through the purchase of treasury bonds is just one form of this assistance—China assisted Greece’s economy by purchasing treasury bonds.”
Bayoumi believes that such financial assistance will support Egypt’s foreign currency reserves, which continue to fall: “When you raise Egypt’s foreign exchange reserve, it increases your credit rating and therefore the cost of borrowing decreases.”
Sheikh Hamad bin Jassim Al-Thani, the Qatari prime minister and foreign minister, said yesterday that his country is not asking for anything in return for its support of Egypt.
During a press conference with his Egyptian counterpart, he added: “During the talks, we did not ask once for preferential treatment when bidding for contracts,” pointing out that Qatari investors will enter bidding for investment projects in the same way as any other interested party. He continued: “In relation to the project to develop the Suez Canal zone, we will enter our proposals in the same manner as other countries and companies.”
In regard to Egyptian companies to operate in Qatar directly and without the need for a sponsor, Bayoumi said: “For fifteen years, I have asked the Arab League to cancel the kafala [sponsorship] system in the Gulf States for Arab laborers,” pointing out that the recent relaxation of the sponsorship system will increase the volume of Egyptian workers in Qatar. He acknowledged that this will increase the number of Egyptian workers in Qatar, particularly in light of the the country increasing its expenditure on infrastructure in preperation for hosting the 2022 World Cup.
The Egyptian prime minister called on “sisterly and friendly” countries to follow the example of Qatar and support the Egyptian economy.