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Gulf's billions are not enough to save the Egyptian economy

June 6, 2014 at 3:56 pm

Saudi Arabia, the United Arab Emirates and Kuwait have transferred billions of dollars to Egypt since the overthrow of the Muslim Brotherhood, to heal the rift that hit the Egyptian economy since the January 25, 2011, revolution in an attempt to re-stabilise the country, Deutsche Welle (the Voice of Germany) reported.

The Deutsche Welle article reported that $20 billion had already been approved, along with the addition of a further $2 billion in May; however even this huge sum will not be enough to kick-start the Egyptian economy.

It is for this reason that Saudi King Abdullah called for a donor conference for Egypt, Deutsche Welle said, pointing out that this call was directed primarily at Gulf States, particularly Kuwait and the United Arab Emirates, who have already joined Saudi Arabia in contributing billions of dollars’ worth of aid.

The newspaper said the Egyptian President-elect Abdel Fatah Al-Sisi is in dire need of such assistance, especially because Egypt is on the verge of total economic collapse. The budget deficit, according to Germany Trade and Invest, a German economic development agency, is 12.5 per cent of gross domestic product. National debt stands at just under 82 per cent, unemployment is at 13 per cent, and the rate of inflation stands at 11 per cent.

The German broadcaster reported that Gulf states injecting investments in Egypt in the belief that the advent of Al-Sisi would maintain calm and stability in the Gulf region and eliminate the rising influence of the Muslim Brotherhood, which constitute the greatest threat to the rulers of the Gulf.

Steven Roll, a Middle East expert at the German Institute for International and Security Affairs, told Deutsche Welle: “Without generous financial assistance from the United Arab Emirates, Saudi Arabia and Kuwait, Egypt would already be bankrupt. In view of Egypt’s precarious budget and financial situation, not even the Gulf’s billions will be enough to achieve an economic turnaround.”