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Qatar throws Egypt $2.5 billion lifeline to prop up pound

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* Egypt convulsed by dollar rush after political turmoil

* Qatar seen as seeking influence in post-Mubarak Egypt

* IMF team expected in 2-3 weeks for talks on $4.8 bln loan

By Yasmine Saleh and Patrick Werr

CAIRO, Jan 8 (Reuters) - Qatar tossed Egypt an economic
lifeline on Tuesday, announcing it had lent Egypt another $2
billion and given it an extra $500 million outright to help
control a currency crisis.

Political strife has set off a rush to convert Egyptian
pounds to dollars over the past several weeks, sending the
currency to a record low against the U.S. dollar and
draining foreign reserves to a critical level.

The government said it expected an International Monetary
Fund technical committee to visit Cairo in two to three weeks'
time to resume talks on a crucial $4.8 billion loan to plug
balance of payments and budget deficits.

Qatar's handout appears to be another example of the Gulf
state seeking to deepen its influence in a Middle East being
reshaped by revolts that have unseated long-serving autocrats.
Doha supported the uprising in Libya and remains a major backer
of the revolt against Syrian President Bashar al-Assad.

"There was an initial package of $2.5 billion, of which $0.5
billion was a grant and $2 billion a deposit," Qatari Prime
Minister Sheikh Hamad bin Jassim al-Thani told reporters after
meeting Egypt's Islamist president, Mohamed Mursi.

"We discussed transferring one of the deposits into an
additional grant so that the grants became $1 billion and the
deposits doubled to around $4 billion," he said.

Hamad added that the new Qatari grants and deposits with
Egypt's central bank had all arrived. "Some of the final details
with the deposits are being worked on with the technical people,
but the amount is there," he said.

"SOLID ALLY"

Abdulkhaleq Abdullah, a political analyst in the United Arab
Emirates, said Qatar viewed Egypt as a valuable strategic asset
and had invested more in the most populous Arab nation than any
other Gulf Arab state since a popular uprising overthrew former
President Hosni Mubarak in February 2011.

"Qatar wants a solid regional ally in Egypt," he said.
"Along with Turkey, this allegiance or axis is fundamental to
the regional role Qatar is trying to carve for itself."

The Qatari funds should help tide Egypt over until the
government can seal an IMF agreement that analysts view as vital
to give the Islamist government credibility with the markets.

The IMF's Middle East and Central Asia director, Masood
Ahmed, left Cairo on Tuesday after meeting Mursi the day before.

"Negotiations with the IMF team will resume from where they
stopped," Mursi's spokesman, Yasser Ali, said. Asked when the
IMF's technical committee would visit Cairo, he said it was
expected in the next two to three weeks.

Egypt struck an initial loan accord with the IMF in November
but last month postponed the deal because of political unrest
set off by Mursi's drive to fast-track a new constitution.

The unrest led Mursi to suspend increases in the sales tax
on a range of goods and services that were deemed necessary to
conclude an IMF deal.

The Egyptian pound weakened to a record low of about 6.48 to
the dollar on Tuesday after the central bank offered $60 million
in the latest of a series of foreign currency auctions
introduced in an attempt to con tain the currency crisis.

The pound has weakened 4 .6 percent on the interbank
market since the system began on Dec. 30. The central bank
auctioned a total of $300 million in auctions last week.

The currency has lost more than a tenth of its value during
the turbulent political transition since Mubarak's fall.

http://www.globalpost.com/dispatch/news/thomson-reuters/130108/qatar-throws-egypt-25-billion-lifeline-prop-pound