Egypt: Country receives generous Gulf support amid its dire public finances

Both Saudi Arabia and Qatar agree to invest billions of dollars in Egypt, part of an influx of Gulf support to help shore up the country’s poor public finances.

The Kingdom of Saudi Arabia and Qatar have both agreed to invest billions of dollars in Egypt over the past two days, part of an influx of Gulf support to help shore up Egypt’s beleaguered public finances.

Qatari and Egyptian officials struck a $5 billion investment deal on March 29, shortly after Qatari Foreign Minister Mohammed bin Abdulrahman al-Thani met with his Egyptian counterpart Sameh Shoukry and Egypt’s Abdel Fattah al-Sisi in Cairo.

An Egyptian statement said that the deal is meant to “strengthen economic and investment cooperation between the two brotherly countries,” which have slowly been repairing their relationship since the Qatar blockade came to an end last year.

On the other hand, Saudi Arabia—another of the countries that participated in the Qatar blockade—announced the next day that it had deposited $5 billion in Egypt’s central bank, while Egyptian officials said the kingdom would invest another $10 billion through its Public Investment Fund.

Also, an Abu Dhabi wealth fund had already announced its intention to invest $2 billion in Egyptian state-owned companies the week before.

The flurry of announcements comes as the state of Egypt’s finances, exacerbated by the repercussions from Russia’s invasion of Ukraine, has been looking increasingly perilous.

Egypt also began talks with the International Monetary Fund (IMF) about support last week, though it is not clear whether these recent deals are meant to replace an IMF loan or instead bolster Egypt’s case for one, considering the IMF often conditions its funding on support from additional donors.

Egypt’s budget has become ever more reliant on foreign support under al-Sisi’s rule, as described by Robert Springborg.

The war has also impacted the vital tourism sector, as most foreign visitors to the country’s Red Sea resorts have come from Russia and Ukraine. Egypt is also the world’s largest importer of wheat, most of it coming from Russia and Ukraine.