London, Asharq Al-Awsat—The governments of Saudi Arabia and the United Arab Emirates offered over USD 8 billion in aid to Egypt on Tuesday, in the wake of the toppling of Egyptian president Mohamed Mursi.
The move will decrease some of the pressure on Egypt’s foreign currency reserves, which were reported to have declined to USD 14.9 billion in June, and with debt repayments expected to drop below the International Monetary Fund’s recommended safe level of a sum equivalent to three month’s imports.
The Saudi package, announced on Tuesday by minister of finance Ibrahim Al-Assaf, amounts to aid worth USD 5 billion in total. USD 2 billion will be in the form of oil and gas products, USD 1 billion in cash, and the remaining USD 2 billion will take the form of a deposit in the Egyptian central bank.
According to the UAE’s state news agency WAM, the UAE also announced on Tuesday that it would send USD 3 billion in economic assistance, composed of a USD 1 billion grant and an interest-free loan of USD 2 billion in the form of a central bank deposit.
The announcement followed a trip by the governor of Egypt’s central bank, Hisham Ramez, to Abu Dhabi, and the arrival in Cairo of an Emirati delegation that included the foreign minister and national security advisor, according to London’s Financial Times.
The new aid package is larger than the economic assistance offered to Egypt in the wake of the toppling of former president Hosni Mubarak, and has been viewed by many observers as a symptom of the poor state of relations between Mursi and the group he hails from, the Muslim Brotherhood, on the one hand, and Saudi Arabia and the UAE on the other.
“We can expect that there will be more investment from Saudi Arabia and the UAE, who were hesitant because of the Muslim Brotherhood beforehand,” Emad Mostaque, a London-based strategist at Noah Capital Markets EMEA, told reporters.
However, others speculated that fears of regional instability arising from the crash of the Egyptian economy also played a significant role in the decision.
“For a lot of people, it would look as if it is a political statement,” an expert in Saudi policy told the Financial Times. “But this is also addressing a dire need.”