Egypt PM to visit donor Qatar amid IMF loan talks

Filed on April 9, 2013

Egypt’s prime minister was due in Qatar on Tuesday for talks with his country’s biggest Gulf Arab financial backer as Cairo is negotiating for an IMF loan to hep ease a deepening economic crisis.

Hisham Kandil was to fly to Doha after attending the swearing in of Kenya’s new president in Nairobi, his office said. He is due to hold a joint news conference with Qatari Prime Minister Sheikh Hamad bin Jassim al-Thani on Wednesday.

Qatar has provided Egypt with $5 billion in loans and grants since Islamist President Mohamed Mursi was elected last year and diplomats said Cairo was seeking further support as it faces a long, hot summer of power cuts and fuel shortages with or without a $4.8 billion International Monetary Fund (IMF) loan.

Qatar has been propping up Cairo’s sagging foreign currency reserves - which hit a new low of $13.4 billion in March, less than the cost of three months’ imports - by making deposits in the Egyptian central bank.

Kandil’s visit follows three days of preparatory meetings by Egyptian central bank governor Hisham Ramez in Qatar, amid tension between Cairo and its major donor over two financial disputes, of which Egypt moved to defuse one on Monday.

Egypt’s financial regulator is holding up a proposed joint venture between QInvest, majority owned by Qatar Islamic Bank , and EFG Hermes, the Middle East’s top investment bank. EFG said the deal signed last year will expire if not approved by May 3.

The deal, which will place EFG’s main operations in a company 60 percent owned by QInvest, is politically sensitive in Egypt because both of EFG’s chief executives are on trial with the two sons of ousted President Hosni Mubarak over allegations of illegal share dealings in relation to a 2007 transaction.

Qatar was also angered by Cairo’s decision to impose a 10 percent tax last month on investment gains from the takeover by Qatar National Bank of local lender National Societe Generale Bank, making QNB effectively overpay.

However, a finance ministry aide said on the eve of Kandil’s visit that the government had decided to cancel the tax on stock dividends and investment gains and would reimburse the revenue already levied to shareholders.

QNB said in December it planned to buy only the 77 percent stake in NSGB held by France’s Societe Generale but in February, the Egyptian regulator gave its approval on condition that the Qatari lender buy 100 percent of NSGB.

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