Gulf money to kick-start Egypt oil, wheat imports
* Gulf states commit $12 billion aid to Egypt
* Ministers to oversee EGPC, GASC not yet appointed
CAIRO, July 11 (Reuters) - A cash injection from Gulf states to Egypt will spur wheat and oil purchases as the country seeks to rebuild depleted stocks, banks said.
Since the army ousted President Mohamed Mursi last week, the United Arab Emirates, Saudi Arabia and Kuwait have promised $12 billion in cash, loans and fuel, which economists say buys Cairo several months to fix its finances.
Two and a half years of political turmoil has left Egypt on the brink of economic collapse, scaring away tourists and investors, shrinking hard currency reserves and hindering its ability to import food and fuel which it distributes cheaply to its 84 million people.
"Some specific commodities they are already short of and have delayed on, I think this provides the comfort for the government entities in charge to execute. Oil and wheat are the two major priorities," said Fehmi Hannachi, head of commodity finance for Middle East and North Africa at ABC International Bank plc and board member of ABC Egypt.
Egypt's former Minister of Supplies Bassem Ouda said the state had just 500,000 tonnes of imported wheat left, enough for less than two months supply for the government's subsidised bread programme.
The world's largest wheat importer usually consumes around 10 million tonnes of foreign wheat a year with around half of that purchased by the General Authority for Supply Commodities (GASC) for the government programme.
The state oil company Egyptian General Petroleum (EGPC) has been struggling to buy fuel since Egypt's 2011 revolution, particularly since the start of this year, when funding problems stopped it buying crude oil on the open market.
Egypt's authorities say a transitional cabinet will be in place by early next week. An interim president and prime minister have been appointed.
In the meantime staff in key government departments are in limbo, without political masters.
"One of the elements banks like us would like to see is clarity on the authorities running GASC and EGPC - the sooner they have ministers the better," said ABC's Hannachi.
BANKS STILL CAUTIOUS
Since the overthrow of Hosni Mubarak, the authorities have run through more than half of Egypt's foreign reserves, or some $20 billion.
"You can get trade finance in Egyptian pounds easily, the problem is to convert it to dollars to pay for the commodity," said a Cairo-based grain trader.
The most populous Arab country has also borrowed billions from abroad and delayed payments to oil companies and other suppliers.
Last week Fitch Ratings downgraded Egypt's credit rating, citing the political turmoil that has toppled the country's first freely elected president.
"Only a few international banks are willing to accept local bank risk in Egypt for food and energy imports," said Mohamed Tousson, head of structured trade finance at Ahli United Bank's Egypt subsidiary.
Tousson estimated the country risk for commodity deals for Egypt added around 2.5 to 3 percent to the cost of finance.
"The Gulf money will bring considerable relief to the currency and would help to inject sufficient liquidity into the market," Tousson added.
The trade financing difficulties prompted Egypt to run down stocks of grains and energy and buy on a hand to mouth basis.
"We are still selectively open but see hardly any requests for commodity trade finance," said Karel Valken, global head of trade and commodity finance at Rabobank.
A central bank official was not immediately available to respond to enquiries over when the Gulf funds would arrive.
Banks warned that even with the money, financial institutions are not expected to rush back into the market given the turmoil over the past two and a half years.
"I think after the parliament and presidential elections which are scheduled for six months' time, if the country has stabilised, international banks will reassess the situation. In the meantime we will continue importing with only a few international banks providing cover," Tousson said.
(Additional reporting by Patrick Werr; editing by Philippa Fletcher)