Egypt has returned to Qatar $2 billion that the Gulf state had deposited with Egypt's central bank (CBE), after negotiations to convert the funds into three-year bonds broke down, central bank Governor Hisham Ramez said on Thursday. Qatar had sent Egypt $3 billion in May, of which it converted $1 billion into three-year bonds. Ramez said the Qatari authorities had agreed the week before last to convert the entire remaining $2 billion but then changed their minds. "So we just repaid the deposit," he said. On July 1, Egypt converted the $1 billion into three-year bonds at 3.5 percent interest and in May it converted another $2.5 billion of Qatari loans into 18-month bonds at 4.25 percent interest. The bonds were listed on the Irish stock exchange. Cairo's relations with Qatar deteriorated after the Egyptian army deposed President Mohamed Morsi on July 3. Qatar had been a firm backer of Morsi's Muslim Brotherhood and lent or gave Egypt $7.5 billion during the year he was in power. In May, Egypt converted $2.5 billion of the Qatari loans into 18-month bonds at 4.25 percent interest, and on July 1 it converted another $1 billion into three-year bonds at 3.5 percent interest. The bonds were listed on the Irish stock exchange.
