Aug 11 2012
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UPDATE 1-Qatar deposits $2 billion to support Egyptian economy
CAIRO, Aug 11 (Reuters) - Qatar will deposit $2 billion at the Egyptian Central Bank in an effort to help support an economy battered by a year and a half of political turmoil, an Egyptian presidency statement said on Saturday.
Egypt's foreign reserves began a steep decline last year when a popular uprising sent the economy into a tailspin and led the central bank to start selling dollars to prop up the country's pound.
The economy faces a looming balance of payments crisis and high state borrowing costs, and experts say financial aid is urgently needed to avoid currency devaluation.
The emir of oil-rich Qatar, Hamad bin Khalifa al-Thani, held talks with newly elected Islamist President Mohamed Mursi during a visit to Cairo on Saturday. It was the first trip by a Gulf leader since Mursi was sworn in on June 30.
Political unrest has chased away tourists and foreign investors and prompted government employees to strike for higher wages.
A mission from the International Monetary Fund (IMF) will arrive in Cairo this month to resume talks with the government over a $3.2 billion loan.
Political tensions have been delaying the unlocking of aid as the IMF demanded that any loan gets broad political support.
Egyptian government expects a growth rate of 3.5-4 percent in the 2012-2013 fiscal year.
Gulf governments have offered some aid, including a Saudi $1 billion deposit at the central bank earlier this year.
(Reporting By Tamim Elyan; Additional reporting by Yasmine Saleh; Editing by Alessandra Rizzo)
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Keywords: EGYPT QATAR/FUND
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