Additional Aid Will Further Deter IMF Deal
BMI View: The additional US$4bn in aid pledged by the UAE will provide further support to the Egyptian economy and the interim government. On a political level the assistance will negate the impact of the US' decision to reduce military aid as well as pushing back any deal with the IMF until mid-2014 at the earliest. In addition, the money will help provide support to the currency over the short term.
The UAE's decision to provide another US$4bn in assistance to Egypt will provide further support to the currency and give additional breathing space for the interim government. The UAE signed an agreement with Egypt worth US$4.9bn, however US$1bn of this had already been pledged. More than US$1bn of the assistance will be used on fuel, while much of the remainder will fund development projects including the construction of 15 wheat silos with a capacity to store 15,000 tonnes each.
Significant Political Impact
|Further Gains On Their Way|
|Egypt - Net Foreign Reserves (US$bn)|