- Support includes $8 billion of investments, energy assistance
- Two governments discussing Saudi purchase of T-bills, T-bonds
Saudi Arabia will provide further support and investment to help Egypt’s economy overcome a foreign currency shortage that’s threatening to derail a nascent recovery.
Saudi Arabia agreed to invest 30 billion riyals ($8 billion) in Egypt through its public and sovereign funds, with inflows beginning immediately, Egyptian Investment Minister Ashraf Salman told reporters in Cairo on Wednesday. Egypt is also set to renew a deal to import Saudi oil products for 5 years on favorable terms, Prime Minister Sherif Ismail said.
A government official, speaking on condition of anonymity, said on Tuesday that the kingdom is considering buying local treasury bonds and treasury bills instead of depositing dollars with the Egyptian central bank to bolster Egypt’s foreign currency reserves.
The promise of funds suggests Saudi Arabia remains committed to supporting Egypt even as plunging oil prices and the war in Yemen strain the kingdom’s public finances. Egypt’s currency crisis caused business activity to contract the most in more than two years in November, and a new aid package would provide dollars needed to import capital goods and raw materials, and help authorities avoid an uncontrolled currency devaluation.
Salman said Saudi Arabia is open to all options to support Egypt’s economy. Along with Kuwait and the United Arab Emirates, the oil-rich kingdom has provided billions of dollars -- including deposits at the central bank and oil products -- to support the Egyptian economy since the 2013 army-led ouster of Islamist President Mohamed Mursi.
Egypt said ahead of talks with Saudi Deputy Crown Prince Mohammed Bin Salman in Cairo on Tuesday that it planned to offer “major” projects in return for support. Talks are expected to continue in Riyadh on Jan. 5.