A United Arab Emirates (UAE) investment fund has reached a $35 billion agreement with the government of Egypt to develop a “next-generation city” in the Ras El Hekma peninsula.
Egyptian Prime Minister Mostafa Madbouly revealed in a press conference on Friday that the partnership with ADQ, the smallest of Abu Dhabi’s three main sovereign investment funds, could potentially attract up to $150 billion in investments, providing a substantial boost to Egypt’s struggling economy.
The influx of funds comes at a crucial time for Egypt, which faces economic challenges exacerbated by recent events, including the conflict in Gaza.
The Ras El Hekma project, spanning 170 square kilometers, will feature various sectors such as technology, light industry, tourism, and residential areas. The development aims to create a modern urban center complete with amenities like amusement parks, a marina, and an airport. The development is set to begin in 2025.
Under the terms of the deal, Egypt will retain a 35% stake in the project. Madbouly outlined that the initial investment will include $15 billion within the next week, with an additional $35 billion expected over the following two months. However, a portion of the investment will involve converting existing UAE dollar deposits in Egypt’s central bank into Egyptian pounds.
The announcement of this landmark deal has sparked some optimism, as seen in the surge of Egypt’s sovereign dollar bonds. Analysts foresee this initiative, coupled with potential IMF support, as instrumental in addressing Egypt’s financing gap and fostering economic stability in the coming years.
However, despite the positive outlook, Egypt grapples with long-standing economic issues, including foreign currency shortages and rising debt. The government faces mounting pressure to implement structural reforms to foster private sector growth and improve fiscal management.
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