Ahmad Abdel-Rahman
March 9, 2024

Egypt concludes the largest agreement ever with the UAE, worth USD35 billion

The Ras El Hekma development project, a joint venture between the UAE and Egypt worth USD 35 billion to build a city, is expected to deepen relations between the two countries. An international airport will be developed there.

According to an official statement,the Egyptian Cabinet said that this deal comes at a time when the state is seeking to attract foreign direct investment (FDI) and increase the state’s foreign exchange resources.

Bloomberg quoted Farouk Soussa, an economist at the Goldman Sachs Group, as saying that the volume of investment between the two countries is much larger than expected. He described the agreement as providing an opportunity for Egypt to restore liquidity in the foreign exchange market during the coming days and weeks.

 Bloomberg said that Egypt is scheduled to receive 35 per cent of the profits from the Ras El Hekma project.

 Soussa also referred to Prime Minister Mostafa Madbouly’s announcement that the project will include a financial and commercial district to attract international companies, in addition to schools, hospitals, universities, and a marina for yachts and cruise ships. He has also said that Egypt expects to attract 8 million additional tourists after completing the city.

Egyptian Prime Minister, Mostafa Madbouly, stressed that the deal is a partnership, not a sale of assets, and the measure of the state’s success lies in the extent to which it attracts foreign direct investments (FDI).

 He also said that the Ras El Hekmaproject is the largest investment project in the history of Egypt, explaining that the urban development plan includes the development of the cities of Matrouh, Salloum and El Alamein.

A few days ago,the Egyptian government also announced another  major investment deal, without giving details.

Partnership with major entities

Madbouly said:  "This major investment deal is being carried out in partnership with major entities, achieving the state’s development goals set by the national strategic plan for urban development.”

He noted that "this deal is the beginning of several investment deals, which the government is currently working on, to increase the state’s hard currency resources”.

He also said: "The full details of this deal will be announced with the signing of the related agreements."He pointed to “the government’s success in attracting huge foreign investments. This confirms the confidence of major investment entities in the Egyptian economy and its ability to overcome challenges."

Madbouly also stressed that this major deal and others, and the significant cash liquidity it will provide in hard currency, will contribute to stabilising Egypt’s foreign exchange market and improving the country’s economic situation.

Speaking about the International Monetary Fund (IMF), Madbouly said: "The government is currently working to finalise the agreement with the International Monetary Fund,” adding that "The government is continuing its procedures approved by the state ownership policy document,in terms of empowering the private sector and increasing the opportunities for its participation in development sectors.”

Suez Canal revenues decline

Egyptian President Abdel FattahEl-Sisi said: “Revenues from the Suez Canal, the global shipping lane, have declined by between 40 and 50 per cent.” During a press conference, he also said that the average income of the shipping lane for Egypt is approximately USD 10 billion annually,” according to the Egyptian News Agency.

El-Sisi attributed the decline to “many crises,” explaining that “the country faced the repercussions of the Corona virus for two years, then the Ukrainian-Russian crisis, then what we see on our different borders with Libya and Sudan, and now with the ongoing war in the Gaza Strip.”

The Suez Canal is one of the most important canals and shipping lanes in the world, as it is the shortest shipping route between Europe and Asia.  It also represents one of the main sources of hard currency for Egypt. Last January, Bloomberg said that "navigation traffic in the Suez Canal declined by 41 per cent from its peak in 2023, amid escalating tensions in the southern Red Sea”.

Photo: The UAE has done a deal with Egypt to develop mega projects in the country. (by Adobe)