Saudi Arabia has pledged $15 billion to support Egypt, the latest Gulf state to announce its accession to support an economy increasingly under pressure from the war in Ukraine and seeking assistance from the International Monetary Fund.
The kingdom has deposited $5 billion in the Central Bank of Egypt, the state-run Saudi Press Agency reported on Wednesday. The Saudi Public Investment Fund is also looking at potential investments of $10 billion in the health care, education, agriculture and financial sectors in Egypt, according to a statement by the Egyptian Cabinet.
The Egyptian Cabinet statement said that Cairo will take quick steps to facilitate the process in order to secure investments that are expected to come through cooperation between the Public Investment Fund and the Egyptian Sovereign Wealth Fund.
International Monetary Fund: Egypt has requested support to implement economic reform
Saudi Arabia deposited $5 billion in the Central Bank of Egypt as part of the kingdom's efforts to help Egypt, according to the Saudi Press Agency.
The yield on Egyptian bonds amounting to 1.75 billion dollars, due in 2032, decreased by 18 basis points to 9.41%, after the announcement of the Saudi deposit in the “Central of Egypt.”
Reducing financing pressures
“The conversion will help ease short-term funding pressures, and may help to conclude a program with the International Monetary Fund because it covers part of the expected funding gap,” said Mohamed Abu Basha, head of macroeconomic research at EFG Hermes, the largest investment bank in the Middle East. ".
For its part, Qatar pledged yesterday, Tuesday, to pump five billion dollars in investments in Egypt, while "ADQ Holding", one of Abu Dhabi's sovereign funds, concluded earlier in March a deal of about two billion dollars to buy stakes in Egyptian state-owned companies listed in stock market.
"Holding" Abu Dhabi is looking to acquire 18% of the Egyptian Commercial International Bank
Egypt, a major food importer, was hit hard by record grain prices driven by the Russian invasion of Ukraine.
Egypt is one of the most indebted countries in the Middle East, as it buys most of its wheat from the two countries (Russia and Ukraine), which are currently at war, while Russian tourists made up a large part of the incoming tourism.
Egypt, the most populous Arab country, has requested discussions with the International Monetary Fund about new support that could include a loan.
Last week, the Central Bank of Egypt allowed the pound, which has been stable against the dollar for nearly two years, to fall by more than 15%, and raised interest rates for the first time since 2017.
Some aid reveals a political interest, as much as it reflects an economic focus. Oil-rich Saudi Arabia and the UAE have pumped billions of dollars into Egypt in aid, deposits, and investments in recent years.
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