Doha aid fails to stem Egypt currency woes An extra $2.5bn in Qatari financial assistance to Egypt has failed to stem the decline of the country's currency or alleviate the pressure on the government of President Mohamed Morsi. Economists said the Qatari injection that was announced earlier this week had in fact arrived in December as the central bank was struggling to stem the erosion of foreign exchange reserves, which have reached the critical level of three months of imports. IN Middle Eastern Economy The Qatari assistance - $2bn in loans and $500m in grants - doubled Doha's assistance to Egypt since the 2011 revolution that ousted Hosni Mubarak. Economists had been expecting the funds to stabilise the currency, which reached record lows in the past two weeks following a crisis over the new constitution. The economy, battered during two years of chaotic political transition, has been further undermined by the confused economic policies of Egypt's first democratically elected Islamist president. The failure to restore confidence in the currency reinforces the urgency of reaching an agreement with the International Monetary Fund on a $4.8bn loan. Technical talks with the IMF are to resume in coming weeks but had been delayed amid government reluctance to pass tax and expenditures measures needed for the Fund's programme to be approved. Mohamed Abu Basha, economist at Cairo-based EFG Hermes, an investment bank, said he expected the pound to continue its slide for another week or two, with progress on IMF talks a crucial factor in determining whether it can be stabilised. The pound has dropped by 5.5 per cent against the dollar since December 27. The currency decline has raised concerns over the ability of the government to pay debts due this month without allowing reserves to drop below the $15bn level and forcing a steeper devaluation. The central bank has been rationing dollar liquidity but markets could be thrown into deeper turmoil if reserve levels drop further and no fresh financial assistance appears forthcoming. Alia Moubayed, senior economist for the Middle East and north Africa at Barclays in London, said Egypt needed to repay more than $1bn in external obligations over the coming six to eight weeks, of which $900m was due this month. Its average monthly current account deficit is between $400m and $500m. "Although Turkey is coming in with $500m more assistance before the end of this month, Egypt could still be short of its financing needs," she says. If they (the authorities) want to keep reserves at $15bn and so at three months of imports, the only option might be to depreciate the currency more or secure additional bilateral funding until the IMF deal is struck. The prospects of an IMF agreement in the short term, however, are still uncertain and will depend on Mr Morsi's willingness to sign off on controversial economic decisions before parliamentary elections. The poll is expected to be held in the coming months, although no specific date has been set. Some analysts say it is also possible that Qatar, which has been a major supporter of emerging Arab democracies and Islamist groups, could provide another injection of funds. Masood Ahmed, IMF director for the region, met senior officials, including the president, in Cairo on Monday, and said they had expressed their firm commitment "to articulate and implement a homegrown macroeconomic programme." But Mr Morsi is under pressure from his Muslim Brotherhood group to delay austerity measures until after the elections, particularly because the Islamists are under fire for pushing forward a new constitution that liberals and leftists opposed.