Within ten days of freeing its currency and witnessing a 38% decline, Egypt was able to negotiate over $40 billion in investment deals from the United Arab Emirates and the International Monetary Fund.
The nation and the United Arab Emirates came to a $35 billion deal towards the development of the Ras El Hikma peninsula on the Mediterranean coast at the end of February according to The Times.
It was the largest investment transaction in the nation’s history and a glaring indication of the confidence its Arab rivals have in it.
Additionally, the government and the International Monetary Fund have signed a new agreement in the previous 48 hours that is worth between $3 and $8 billion to stabliize its currency and bost its foreign reserve.
Egypt’s Central Bank became bullish on interest rates in advance of the agreement, increasing MPR by 600 basis points and further depreciating the country’s currency, which caused the Egyptian pound to lose 38% of its value.
It is anticipated that the current influx of investments would boost investor confidence in the nation, which is experiencing its worst economic crisis in decades.
Egypt’s inflation rate in December 2023 was 33.7%; however, in January, it dropped to 29.8%.
Commodity prices, trade, and tourism have all suffered significantly as a result of the wars in Ukraine, Israel, and Hamas, which are all located close to the country’s border, as well as the attack on boats by the Houthi rebels in the Red Sea.
In 2022, Egypt experienced economic difficulties following Russia’s invasion of Ukraine which sent commodity prices over the roof especially wheat.
The nation spends over $4.53 billion a year on wheat imports, making it one of the biggest importers worldwide.
Following the conflict in Ukraine, Egypt has difficulties maintaining its food subsidy due to an increase in wheat and energy imports; this led to a $20 billion capital flight from bond holders.
Additionally, the border dispute between Israel and Hamas has made the country’s beaches and pyramids less tourist-friendly.
As a show of support for Hamas, the Houthi rebels’ ongoing attacks on commercial boats in the Red Sea delivered a severe damage to another vital source of revenue for the nation’s economy. As a result, there was less traffic along the Suez Canal.
After the most recent transactions, Egypt may now look to the future with optimism that the beginning of the end of its most recent bout of economic difficulties lies ahead, particularly with another multibillion-dollar investment pact from Gulf heavyweight Saudi Arabia.
