The Qatari government notified the Egyptian government on Monday of its decision to indefinitely suspend bond transfers from the Central Bank of Egypt (CBE) to the Qatar National Bank (QNB), according to Turkish news agency Anadolou. The Qatari government had previously deposited $2 billion in the CBE as part of an aid package.
The official noted in a telephone conversation with Anadolu that the Qatari government stated the following in its notification: “Qatar will postpone the rest of the bond package program previously agreed between Egypt and QNB Bank. A representative of the Qatari government will determine a further meeting to notify the Egyptian government."
Beginning in July, Egypt has been transferring the $2 billion deposit received from Qatar to fixed term bonds.
In response, an official source in the CBE told Reuters on Wednesday that Egypt would repay the $2 billion Qatari deposit within a few days unless negotiations to continue converting the money to bonds succeeds.
Commenting on the Qatari statement, Magdy Toulba, an economic expert and manager of a financial and economic consultancy company, told Egypt Independent that this decision shows the difference between economic cooperation based on mutual interest and those based on political interest.
"Qatar is not a country which desires to alleviate Egypt's economic deficit as people previously believed, and the last statement [issued by the Qatari government] is no more than a ‘plot’ after [initial] Gulf support to Egypt," said Toulba.
After the ouster of Morsi, Arab countries pledged financial aid packages to Egypt, including a $5 billion package from Saudi Arabia, $3 billion from the United Arab Emirates and $4 billion from Kuwait, as well as some Bahraini aid.
Regarding the effect of the Qatari decision on Egyptian foreign cash reserves, Toulba emphasized that in the short term it would have no effect, as he believes that Gulf countries, such as Saudi Arabia, Kuwait and UAE, will pump more money into Egypt as a response.
But in the long term, Toulba pointed out that any country dependent on “begging” loans and deposits to heal its economic woes would suffer.
"The Egyptian response to the Qatari statement was nothing but a political feedback, especially as Egypt is not currently living in a good economy which would allow it to stop issuing bonds," he said.
