Saudi’s $10 billion pledge to Egypt delivers first deals
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Alaina
- . August 11, 2022
- . Update: August 11, 2022 7:21 pm
Saudi arabia –In order to support the faltering economy of a nation regarded as a keystone in the Arab world, a unit of Saudi Arabia’s sovereign wealth fund purchased state-owned shares in four publicly traded Egyptian firms for $1.3 billion.
Egypt’s Planning Ministry and the PIF, as the Saudi fund is known, said in separate statements on Wednesday that the Saudi Egyptian Investment Co., a new company established by the $620 billion Public Investment Fund, had acquired minority stakes in Abou Kir Fertilizers & Chemical Industries Co., Misr Fertilizer Production Co., Alexandria Container and Cargo Handling Co., and E-Finance.
The monarchy has promised to invest $10 billion in Egypt in areas including agriculture, health care, and education. It already offered assistance in March when it made a $5 billion deposit into Egypt’s national bank.
Egypt, a significant food importer, has been severely impacted by Russia’s invasion of Ukraine. The fighting has increased the cost of wheat and petroleum in the North African country, placed pressure on its currency, and forced it to request aid from the International Monetary Fund.
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According to Egypt’s planning minister, the Saudi acquisitions fit “within the context of the state’s strategy to increase the ownership base and promote foreign direct investment.” Egypt’s access to financing from the Gulf offers a key safety net as it attempts to fix its finances.
The new venture by Saudi Arabia comes after a previous $2 billion agreement by the Abu Dhabi wealth fund ADQ to acquire state-owned shares in publicly traded firms. In March, Qatar further promised to invest $5 billion in Egypt.
Egypt may require a $15 billion loan from the IMF, according to Goldman Sachs Group Inc., while Finance Minister Mohamed Maait claimed Egypt is just looking for a lesser loan. Due to bondholders pulling out of what had been a popular market, the nation has experienced an outflow of foreign capital of around $20 billion this year.
In a statement made last month, Saudi Crown Prince Mohammed bin Salman announced that as part of his Neom megaproject, which is situated across the Gulf of Aqaba on the Red Sea, he also intends to invest in Egypt’s Sharm El-Sheikh. He stated, “We are talking to the Egyptian authorities. We’re going to make significant investments in Egypt that will help us as well.
