Saudi Arabia’s King Abdullah called for an international effort to raise funds for Egypt’s battered economy after his ally, former army chief Abdel-Fattah El-Sisi, won the country’s presidential election.
King Abdullah said friends of Egypt should hold an aid conference to pledge financial support, according to the official Saudi Press Agency, a call backed by the United Arab Emirates. The king also urged El-Sisi, whose victory was officially declared yesterday, to engage in a dialogue with those of his opponents who haven’t been involved in violence. A crackdown by security forces on the Muslim Brotherhood and its allies since El-Sisi spearheaded the ouster of elected leader Mohamed Mursi left hundreds dead and thousands in jail.
Saudi Arabia and the U.A.E. have led efforts among oil-rich Gulf nations to bolster Egypt’s economy. El-Sisi’s supporters at home are looking for him to create jobs and restore order after three years of turmoil since the 2011 popular uprising that ended President Hosni Mubarak’s three-decade autocratic rule.
“Beyond just the funding gap and fuel supplies, the country has a need for investments to create jobs, which requires attracting and involving more and more” partners, Mohamed Abu Basha, an economist at EFG-Hermes Holding SAE, said by phone today. “Others may not have been in a position to join until you have an elected president.”
Egyptian Eurobonds extended a winning streak into a 13th day, the longest since January, after the Saudi king’s call. The yield on the government’s benchmark 5.75 percent Eurobonds maturing in 2020 fell one basis point to 4.79 percent at 2:38 p.m. in Cairo, set for the lowest close since December 2010. The benchmark EGX 30 Index of stocks climbed 1.9 percent.
Separately, the U.S. said it’s looking forward to working with El-Sisi “to advance our strategic partnership” and that U.S. President Barack Obama plans to speak with the country’s new leader in the coming days, according to a White House statement.
Noting findings by election observers that the vote for president was administered “professionally and in line with Egyptian laws,” the U.S. expressed concerns “about the restrictive political environment” in which it was held.
“We urge the President-elect and the government to adopt the reforms that are needed to govern with accountability and transparency, ensure justice for every individual, and demonstrate a commitment to the protection of the universal rights of all Egyptians,” according to the statement.
Since the army intervention, Saudi Arabia, the U.A.E. and Kuwait have pledged about $15 billion in aid, helping to prop up foreign-exchange reserves and limit the weakening in the Egyptian pound. Even with that backing, Egypt’s economy is growing at the slowest pace in two decades, as tourists and investors stay away because of political unrest.
El-Sisi and other officials have stressed the need to restructure energy subsidies without hurting the poor while interim authorities have proposed a capital gains tax.
Egypt “needs us today more than ever,” King Abdullah said. He called for a donor conference “to help Egypt out of its economic crisis,” according to SPA.
The U.A.E. expressed support for King Abdullah’s proposed aid conference, the official WAM news agency reported. The U.A.E.’s foreign minister said last week that its search for partners to support Egypt includes the International Monetary Fund and the World Bank.
Egypt has repeatedly engaged in loan talks with the IMF after the uprising against Mubarak, without ever concluding a deal.
“The possibility of the new Egyptian government seeking an IMF loan cannot be ruled out as external financing requirements are large,” Raza Agha, chief Middle East and Africa economist at VTB Capital Plc in London, said by e-mail. “Gulf donors may recognize the significance of the challenges that El-Sisi faces, along with a need to show some differentiation compared to the Mursi presidency.”
(An earlier version of this story corrected the name of Abu Dhabi’s crown prince.)