Egypt announced on Friday that it has signed an agreement with the United Arab Emirates to develop a desirable portion of its north coast in the Mediterranean, which would result in $35 billion in investments over the next two months for the heavily indebted nation.
Egyptian Prime Minister Mostafa Madbouly said at a news conference that the agreement with ADQ, the smallest of Abu Dhabi’s three main sovereign investment funds, is for the development of the Ras El Hikma peninsula and might potentially attract as much as $150 billion.
Laptops 1000Work on the project, which would include investment zones, residential and commercial buildings, as well as tourist and recreational complexes, is anticipated to begin in 2025, according to a statement from ADQ.
In anticipation of the announcement, Egypt’s sovereign dollar bonds surged on Friday and kept rising throughout the afternoon. The largest gains were made in longer-dated notes; according to Tradeweb statistics, bonds due in 2047 or later rose more than 3 cents in value to trade at 66.6-70.2 cents, which is the highest level for the majority of the bonds in around a year.
Located roughly 200 km (124 miles) west of Alexandria, Ras al-Hikma is surrounded by affluent Egyptians during the summer months who come to enjoy the expensive resorts and white sand beaches.
A chronic shortage of foreign money has been one of Egypt’s many economic problems, which has put constant pressure on the value of the Egyptian pound, government spending, and small enterprises.
Following attacks on shipping in the Red Sea by Yemen’s Houthi movement, the Suez Canal lost revenue, causing inflation to spike to record highs last summer and a potential worsening of the foreign exchange deficit.
IMF AID
The International Monetary Fund withdrew its $3 billion financial support package in December 2022 when Egypt renounced its promise to transition to a free currency rate regime and its state asset sales program advanced slowly.
The IMF reported on Thursday that talks with Egypt to expand its IMF loan program are moving along quite well. According to the statement, Egypt required a “very comprehensive support package” to address its economic problems, which included pressure from the Gaza War.
Laptops 1000The richest Gulf governments have given Egypt, the most populous nation in the Arab world, bailouts of tens of billions of euros since President Abdel Fattah al-Sisi entered office in 2013.
However, in the last two years, Gulf countries have mostly abandoned this path in favor of associating their support with free-market reforms and making lucrative investments in some of Egypt’s most valuable assets.
The financial crisis has put more pressure on Egypt’s authorities to take action and reduce the scope of the enormous infrastructure projects—including the construction of a new capital—that have been the hallmark of Sisi’s presidency.
Sisi has persisted in stating that these massive projects will generate thousands of jobs and billions of dollars in foreign investment.
