Egypt has been able to secure over $40 billion in investment deals from the United Arab Emirates (UAE) and International Monetary Fund (IMF) in just 10days after floating its currency and seeing it nosedive by 38%.
Late in February, the country reached a $35 billion agreement with the United Arab Emirates (UAE) to develop the Ras El Hikma peninsula on the Mediterranean coast.
It was the biggest single investment deal in the country’s history and a clear signal of the faith its Arab counterparts vest in it.
Also, the country in the last 48 hours has reached a new deal with the International Monetary Fund (IMF) in the region of $3 to $8 billion to stabilize its currency and boost its foreign reserve.
In anticipation of the deal, Egypt’s Central bank went bullish on interest rate raising MPR by 600 basis points and further devaluing its currency- a move that saw the Egyptian pound lose 38% of its value.
The recent investment inflow into the country is projected to restore investor confidence in the country battling with its worst economic crisis in decades.
Egypt ended 2023 with inflation at 33.7% as of December however this slowed to 29.8% in January.
Egypt’s economic woes
The war in Ukraine, Isreal and Hamas conflict just on its border and the Houthi rebel attack on vessels on the Red sea have dealt significant blow to commodity prices, trade and tourism in the country.
Egypt’s recent economic woes started in 2022 after Russia’s invasion of Ukraine which sent commodity prices over the roof especially wheat.
The country is one of the world’s largest importers of wheat spending around $4.53 billion in imports annually.
With increase in wheat and energy imports following the war in Ukraine, Egypt ran into troubles sustaining its food subsidy- a situation that triggered $20 billion capital flight from bond holders.
Also, the conflict on its border between Hamas and Israel resulted in its beaches and pyramids unattractive to tourist.
Another crucial source of income to the country’s economy was dealt a huge blow with the continuous attacks of shipping vessels by Houthi rebels in the Red sea- an action termed as solidarity with Hamas. This caused reduced traffic around the Suez Canal.
Potential deal with Saudi Arabia
Egypt can now look to the future with hope that it’s the beginning of the end of its latest bout of economic troubles with the latest deals especially with another multi-billion dollar investment deal from Gulf powerhouse Saudi Arabia in the offing.
