UAE invests $35 billion in Egypt in new city
Egypt has reached a $35 billion deal with the United Arab Emirates to develop the city of Ras el-Hekma on the northwest coast, Egyptian Prime Minister Mostafa Madbouly announced on Friday after weeks of speculation.
During a press conference attended by Egyptian and Emirati officials, Madbouly said Egypt would receive an advance of $15 billion next week and another $20 billion within two months.
The deal is the largest foreign direct investment in an urban development project in the country's modern history, the prime minister said. This is a partnership between the Egyptian government and an Emirati consortium led by ADQ. News of the sale has sparked condemnation from government critics who say the land is one of Egypt's most valuable coastal locations and should be developed by local investors.
But Madbouly said the Egyptian state will have a 35% share of the profits from this project, although it is a private investment with the majority of shares held by the UAE consortium.
The area of the Ras el-Hekma project is 170 million square meters and will include residential neighborhoods, tourist resorts, schools, universities, an industrial zone, a central financial and commercial district, an international marina for tourist yachts and an international airport south of the city. A kind of Sharm el Sheikh, but with, in addition, a financial district.
The new city
Madbouly said the deal will include $11 billion already deposited by the UAE at the Central Bank, an amount that will be converted into a grant.
Regarding the fate of the residents of the Ras el-Hekma area, Madbouly said that they will be relocated to other areas and receive financial compensation. He added that the project will alleviate the country's economic crisis.
Commenting on the agreement, Egyptian tycoon Naguib Sawiris said it will help resolve the current crisis by "attracting foreign currency, creating jobs and stabilizing the exchange rate."
Following the announcement of the Ras el-Hekma agreement, the price of the US dollar in parallel markets fell by 5 Egyptian pounds to 57, compared to 62 on Thursday, according to the Cairo24 website.
Egypt is currently in talks with the International Monetary Fund over a bailout deal expected to exceed $10 billion. This deal is expected to be followed by a devaluation of the currency to match black market rates, nearly double the official rate of 31 Egyptian pounds to the US dollar.
Madbouly said on Friday that Cairo was now "just a few steps away" from reaching an agreement with the IMF, following the Ras el-Hekma investments. We can therefore say that the mega financing of the Emirates was a real lifesaver thrown by the Gulf to President Al Sisi who, in this way, manages to compensate for the negative effects of the Houthi attacks in the Red Sea which
Egypt, home to more than 109 million people, is grappling with a severe economic crisis, with record inflation and a shortage of foreign currency. In August, annual inflation in Egypt reached nearly 40%, according to official data, plunging many Egyptians close to or below the poverty line. Fortunately, inflation has recently dropped slightly.
More than half of the population was already below or close to the poverty line before the current crisis. Foreign debt has quadrupled, reaching $164 billion, in the nearly 10 years of President Abdelfattah el-Sisi's presidency. Debt servicing is consuming the majority of the state's annual expenditures.
Egypt's total foreign exchange reserves amount to $35 billion. According to the Central Bank of Egypt, the ratio of short-term debt to foreign currency reserves will exceed 80% in 2022, double that of 2021.
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The article UAE invests $35 billion in Egypt in new city comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/gli-emirati-arabi-uniti-investo-35-miliardi-di-dollari-in-egitto-in-una-nuova-citta/ on Fri, 01 Mar 2024 08:00:29 +0000.