Saudi Arabia has pledged $15 billion to support Egypt, making it the latest Gulf state after the UAE and Qatar to back an economy that’s under increasing pressure from Russia’s war in Ukraine.
A major food importer, Egypt has been hit hard by record grain prices fueled by the Russia-Ukraine conflict, and is seeking help from the International Monetary Fund (IMF) to shore up its economy. One of the Middle East’s most indebted nations, it buys most of its wheat from the two countries currently at war, while Russian visitors previously made up a significant portion of its tourism market.
To help the nation, the Kingdom of Saudi Arabia deposited $5 billion in Egypt’s central bank, the state-run Saudi Press Agency reported.
Saudi Arabia’s Public Investment Fund is also looking into $10 billion of potential investments in Egypt’s healthcare, education, agriculture, and financial sectors, according to a statement released by the Egyptian cabinet.
Egypt will take quick steps to ease the process in order to secure investments expected to come through cooperation between the PIF and Egypt’s sovereign wealth fund.
The deposit in the central bank is part of the kingdom’s efforts to help Egypt. The yield on Egypt’s $1.75 billion of bonds maturing in 2032 dropped 18 basis points to 9.41 percent after the news, Bloomberg reported.
The kingdom’s pledge comes after the Qatar Investment Authority, the nation’s sovereign wealth fund pledged to pump $5 billion into investments in Egypt.
Earlier this month, Abu Dhabi wealth fund ADQ made a roughly $2 billion deal to buy Egyptian state-owned stakes in publicly listed companies.
One of the first tangible signs of fresh Gulf support for Egypt, it showed the UAE acting to shore up food security, a Bloomberg report stated.
The most populous Arab nation, Egypt enacted an economic reform package backed by a $12 billion IMF loan from 2016-2019 and secured further credit in 2020 during the pandemic.
Last week, the Egyptian government said that it had requested discussions with the IMF on new support that may include a loan. Egypt’s central bank allowed the Egyptian pound – which had been stable against the dollar for about two years – to weaken by more than 15 percent, and raised interest rates for the first time since 2017.
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