Muhamad yehia
Saudi Arabia is planning to convert its $10 billion deposit with the Central Bank of Egypt (CBE) into an investment.
The Saudi investment minister Khalid al-Falih announced the news during a meeting with Egyptian prime minister Mostafa Madbouly on Thursday.
It follows a $35 billion agreement by the UAE sovereign wealth fund ADQ to develop Ras El Hekma on the north coast in February. This deal included $11 billion of Emirati central bank deposits converted to local currency for investment.
Analysts say that the proposed Saudi deal could be conducted along similar lines
“This was kind of expected,” said Nada Hashim, a senior investment analyst at CI Capital Asset Management.
“In the last few years, the GCC has preferred to give any support in the form of investments rather than deposits.”
Speaking to reporters, Al-Falih said that the Saudi government sees Egypt “as a complement to the kingdom, a promising market and an important export platform to other countries in the region”.
Hashim said she expects the investments to be used either for the much talked about Ras Gamila resort project on the Red Sea, or for investment in public equities, most likely in export or import substitute sectors.
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The government might be hoping for the latter, she said, as “an opportunity for them to showcase the incentives that we’ve been talking about”. They could attract further investment from Saudi Arabia and elsewhere.
The General Authority for Investment has introduced new programmes over the past few years to streamline the process for foreign investors in Egypt.
Speaking at talks on Thursday, chairman of the Saudi-Egyptian Business Council Bandar al-Amiri said that these efforts have solved 80 percent of Saudi investors’ problems with operating in Egypt.
At the same meeting Muteb Al Shathri, senior director of Mena investments at the Public Investment Fund, said that its investments in Egypt had reached around $3 billion. He added that this number is likely to double following the proposed debt swap.