| Here at Rantburg we have been watching Egypt's descent, tracked against Spengler's analysis and predictions (here's his latest). Below is what it looks like from within Egypt. May God help them all, because President Morsi most assuredly won't be able to. |
"Qatari funds are a short-term boost because of Egypt's current economic condition, but will they help it recover?" That is the question Bloomberg news agency, specialising in financial and economic issues, put to Said Hirsh, the financial analyst and expert in London, who has a PhD in economics from Bristol University, right after Qatar announced it is buying Egyptian government bonds worth $3 billion and sending natural gas to Egypt. Hirsh's response was definitive: "I don't think so. It is entirely unclear what the Egyptian government is trying to do."
The impact of Qatari loans was quick (and I do not use the term Qatari assistance because it is buying government bonds -- a news scoop for Al-Shorouq quoting a source at the Ministry of Finance who said it will be for 18 months with an interest rate of 4.6 per cent). Alongside a loan worth $2 billion from Libya without interest for five years and a grace period of three years (meaning Egypt would not begin paying back the loan for another three years), these funds directly propped the Egyptian pound after it lost 10 per cent of its value in four months, and about one quarter of its value since January 2011.