Egypt foreign reserves may hit $21.2bn

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Photo – BBCNews

Egypt’s foreign reserves would jump by $6.8 billion to $21.2 billion in the coming period, an official at the Central Bank of Egypt told a state-run paper on Tuesday.

The anonymous official told the state-run newspaper Al-Gomhurriya that reserves are expected to soar after Qatar delivers $1.5 billion, the second batch of its previously announced deposit to the CBE.

Qatar said on Saturday it would deposit $2 billion. Egypt has only received $500 million.

Egypt’s foreign reserves began a steep decline last year when a popular uprising that toppled Hosni Mubarak led the central bank buy Egyptian pounds to support the currency.

Saudi Arabia stepped in with financial support in June, approving $430 million in project aid for Cairo and a $750 million credit line for oil imports.

The official added that the increase could also go higher if the IMF agrees to Egypt’s request to increase the loan to $4.8 billion.

On Wednesday, Prime Minister Hesham Qandil will begin talks with head of the International Monetary Fund Christine Lagarde aiming at reaising a proposed loan from $3.2 billion to $4.8 billion, or 300% of Egypt’s capital in the IMF.

The government decided to lower subsidies on oil products from LE95.5 billion ($15.70bn) in the 2011-2012 budget to LE25.5 billion ($4.19bn) in the 2012-2013 budget by applying a coupon system on butane, gas and diesel in addition to other procedures for rationalising energy consumption.

The source told the paper that interest rates for the Egyptian pound will either be cut or fixed following a meeting by the central bank’s committee for monetary policies in mid-September.

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