The UAE has agreed to pour Egypt’s central bank with a $1bn deposit for a duration of six years in a new show of support for Abdel Fattah al-Sisi, reported the BBC.
Emirates News Agency said that the agreement was signed by the director general of Abu-Dhabi development fund and the governor of the Central Bank of Egypt (CBE) .
The announcement comes as Egypt grapples with a dollar shortage and dwindling foreign reserves, and as Sisi has been preparing the public opinion for economic reform measures, including further subsidy cuts.
At an earlier time, the Central Bank of Egypt has announced that the foreign reserves have declined from $17bn in April to $15.5 bn in July.
Egypt suffers severe shortage in hard currency after the decline in tourism revenues from $9bn in 2014 to $5bn in 2015 as well as the decline in Egyptian transmittance from abroad.
In fact, Egypt needs around $70bn annually for exports from abroad according to the recent figures in the state’s annual budget this year.
In this context, Emirates News Agency said that the $1bn deposit, which is for a six-year period, comes as part of the UAE’s “unwavering position in supporting Egypt and its people” and in recognition of Egypt’s “pivotal role in the region.”
In April, the UAE allocated $4bn to support Egypt -$2bn in investment and another $2bn to be deposited at the central bank to support foreign exchange reserves- but none of the promised transfers have changed Egypt’s deteriorating economy.
Gulf countries have poured billions of dollars to support al-Sisi regime after he led a military coup in 2013 against Egypt’s first democratically elected president Mohamed Morsi. Egypt has received more than $20bn in aid from Gulf countries.
According to the Economist’s editorial,”The Ruining of Egypt”, al-Sisi regime is fragile as it depends only “on the generous injections of cash from Gulf states. But, with all billions of petrodollars, Egypt’s budget and current-account deficits are gaping, at nearly 12% and 7% of GDP respectively. ”
As a result, the bitter conditions of the Egyptian economy under the Egyptian regime’s policies led Al-Sisi to go beret in hand to the IMF for a $12 billion bail-out.