Qatar wealth fund transfers $1b to Egypt’s central bank

Doha: Qatar’s sovereign wealth fund has deposited $1 billion with Egypt’s central bank as the Gulf state moves closer to a deal to acquire government holdings in some of the North African nation’s major firms.

The $445 billion Qatar Investment Authority transfered the funds amid discussions over it acquiring state-held stakes in Egyptian companies, according to people with knowledge of the matter. Due diligence on the assets and finalizing a deal may take time so the QIA made the deposit to help Egypt to shore up its finances in the interim, the people said, asking not to be identified because the talks are confidential.

Bloomberg last month reported Qatar was in advanced talks over a deal worth about $2.5 billion. The QIA declined to comment on the deposit, while officials at Egypt’s central bank weren’t available to comment.

Urgency is building for Egypt’s $400 billion economy as it seeks to plug its external funding gap. Soaring oil and commodity prices have hit one of the world’s largest wheat importers hard, as has the loss of tourists from Russia and Ukraine. The conflict has put pressure on Egypt’s currency and prompted it to seek International Monetary Fund assistance.

Gulf Arab states have pledged over $20 billion in deposits and investments for Egypt. Egyptian President Abdel-Fattah El-Sisi visited Doha in September, and a port cooperation agreement was signed. Qatar also deposited $3 billion into Egypt’s central bank earlier this year.

In October, Egypt agreed on a rescue package from the IMF, embraced a more flexible currency regime and raised interest rates.