Egypt PM: ‘UAE to pump $35bn into Egypt within 2 months’

Egyptian Prime Minister Mostafa Madbouly announced on Friday that the United Arab Emirates (UAE) plans to pump “$35 billion in direct investments” into Egypt within two months, which is experiencing one of its worst economic crises in decades.

The prime minister stressed that this amount “will be used to solve the economic crisis” and will contribute to solving the foreign currency problem in Egypt. Egypt is currently finding it challenging to provide this to secure its import needs, pay its foreign debt amounting to $165 billion and control the problem of having two prices for the dollar – one official in the banks and the other on the black market – which is around twice the official price.

Madbouly explained that these investments will be injected in accordance with an agreement signed on Friday between the Egyptian and Emirati governments to develop 170.8 million square metres in the Ras El-Hekma region on the Mediterranean Sea in northwestern Egypt.

The Egyptian prime minister confirmed that in a week, $15 billion will come directly from the Emirates, including $10 billion that will be transferred directly and $5 billion that is part of an Emirati deposit with the Central Bank of Egypt, with a total value of $11 billion.

He added that the second batch of investment funds will be pumped after two months: “Amounting to $20 billion, including $6 billion, which is the remainder of the UAE’s deposit with the Central Bank.”

Madbouly stated that the total value of the project, which requires the establishment of an integrated city including a vast tourist area and a marina for large cruise ships, in addition to an international airport that will be managed by the Emirates, amounts to $150 billion.

Read: IMF seeks to boost Egypt ahead of possible entry of Gaza refugees

According to official figures, Egypt’s foreign debts have more than tripled in the last decade, reaching $164.7 billion, including more than $42 billion due this year.

The country’s hard currency shortage prompted JP Morgan to exclude Egypt from some of its indicators earlier this month.

Moody’s Investors Service also downgraded Egypt’s outlook from “stable” to “negative”, citing concerns about external financing and the difference between the official exchange rate and the parallel market.

The price of the dollar currently in the official market is about 31 Egyptian pounds, while it reaches about 70 Egyptian pounds in the parallel market.

The maturity of some foreign debts this year coincides with the disruption of navigation in the Red Sea due to Yemeni Houthi attacks on ships on account of the genocidal war on the Gaza Strip. This negatively affected the Suez Canal, the revenues of which are one of the most prominent sources of foreign exchange in Egypt, and which decreased by between 40 and 50 per cent, according to the Egyptian president.

Transfers from Egyptians abroad, which account for the country’s primary source of foreign exchange, recorded a decline during the first quarter of the fiscal year 2023-2024 by approximately 30 per cent compared to the same period of the previous fiscal year.

Egypt signed an agreement with the International Monetary Fund (IMF) at the end of 2022 to obtain a loan worth $3 billion, but it only obtained the first payment of $347 million.

The disbursement of the following tranches was postponed several times due to disagreements between Egypt and the IMF regarding the structural reform programme and the IMF’s demands, especially for a flexible exchange rate and reducing the share of the state and the army in the economy.

The IMF announced that an agreement with Egypt would be reached within a few weeks regarding the first and second reviews of the loan agreement, which were postponed several times last year.