Egypt Morsi Coup: Gulf States Offer Interim President Adli Mansour $8bn in Aid

The United Arab Emirates and Saudi Arabia has their boosted support for Egypt's interim president Adli Mansour by offering the country $8bn in aid, only a week after the elected Islamist president Mohamed Morsi was ousted by the army.

The wealthy Gulf Arab states stepped in swiftly with financial support that could relieve pressure on the transitional authorities at a time of economic stagnation.

Saudi Arabia has offered $3bn (£2bn, €2.3bn) in cash and loans to the transitional cabinet and an additional $2bn worth of fuel. The UAE has also offered a grant of $1bn and a loan of $2bn.

The funds are desperately needed by Egypt, as last year's Arab Spring unrest has driven tourists and investors and investors away.

Egypt also suffers from a range of economic issues, including high inflation and diminishing foreign exchange (FX) reserves.

FX reserves have more than halved since December 2010, standing at around $16bn in May 2013. This has since fallen further, as Egypt's foreign reserves stood at just $14.9bn at the end of June.

Since Morsi took over, inflation has run over 8% while a number of facets of the economy continue to contract, such as consumption, industrial production and manufacturing activity.

While the $8bn in aid is a welcomed respite, analysts say that Egypt needs more than double this amount.

"Egypt needs around $15bn - $18bn to really have some breathing space which will allow both the interim government and a new government once elected the funds to put the economy back on the mend," said Ishaq Siddiqi, market strategist at ETX Capital.

"The [proposed] International Monetary Fund's loan for $4.8bn is crucial for that to happen."

Meanwhile, Egypt's interim president is said to be offering roles for Muslim Brotherhood leaders in his transitional cabinet, in an attempt to reduce political tensions after the recent bloodshed.

However Mansour's gesture has failed to appease the party led by Mohamed Morsi, who was ousted as president on 3 July.

The Egyptian army, which ousted Morsi, has insisted that the transition period will be difficult for the country and urged all political parties to participate. The military also warned against using violent methods against the administration.