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The United Arab Emirates has pledged to invest USD 35 billion in Egypt, marking a significant breakthrough for Cairo in its efforts to address one of the most severe foreign exchange crises in decades. This comes on the heels of previous Emirati investments in the North African country.
These ambitious plans consist of the development of a prestigious area on Egypt’s Mediterranean coast known as Ras El-Hekma, a project hailed by Egypt’s Prime Minister, Mostafa Madbouly, as the largest deal in the country’s history. Abu Dhabi wealth fund ADQ has pledged to acquire the development rights for Ras El-Hekma for USD 24 billion, with an additional USD 11 billion investment slated for various real estate and prime projects across Egypt.
This deal will be the beginning of correcting the course of the Egyptian economy, stated the prime minister, a message of confidence from the UAE.The announcement of the UAE’s investment in Egypt reverberated positively in the financial markets, with Egypt’s foreign bonds experiencing a surge, emerging as the top performing sovereign debt in emerging markets. The government’s dollar-denominated notes maturing in 2051 saw a significant increase of 5 cents on the dollar.
The substantial influx of funds is expected to support Egypt in implementing a long-awaited currency devaluation, potentially the fourth since early 2022, with authorities poised to manage the adjustment effectively.
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These funds are projected to aid in aligning the official exchange rate of the local currency with its black-market value, contributing to stabilizing the Egyptian pound. Currently, the pound is traded at around 30.9 per dollar in local banks, while the black market rate is approximately 60.
