Saudi Arabia agreed to provide Egypt with more than $3 billion in loans and grants to help its dollar-starved economy.
The kingdom will loan $1.5 billion to develop the Sinai peninsula and $1.2 billion to finance Egypt’s oil purchases, Egyptian Minister of International Cooperation Sahar Nasr told Bloomberg News from the Saudi capital, Riyadh. Egypt will also receive a $500 million grant for buying Saudi exports and products, she said, without providing further details. The loans are on favorable terms and will be formally signed on Tuesday, she said.
The fresh aid suggests that Saudi Arabia is still committed to supporting Egypt even as the oil-rich kingdom cuts subsidies to shore up its finances, though it is significantly smaller than the tens of billions which Saudi Arabia along with Kuwait and the U.A.E poured into Egypt after the 2013 military-led ouster of Islamist President Mohamed Mursi. Egypt has offered tourism and housing projects to Saudi funds, an Egyptian government official said last week.
Last month, Saudi Arabia promised to invest 30 billion riyals ($8 billion) in Egypt through its public and sovereign funds. It also said it will help Egypt meet its oil needs for five years on favorable terms.
Egypt’s currency crisis caused business activity to contract the most in more than two years in November. The new aid package should free up dollars needed to import capital goods and raw materials, and help authorities avoid an uncontrolled currency devaluation.