UAE Buys Egypt Coastal Town for $35 Billion

Egypt and the UAE signed an agreement to work together. However, they will improve a place called Ras al-Hikma. Ras al-Hikma is on the western side of Alexandria. Moreover, this a significant deal among all the deals. The Prime Minister of Egypt, Mostafa Madbouly told something great about this project. He said that the project would generate $150 billion. The UAE plans to invest $35 billion directly into Egypt within the next two months.

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Prime Minister Madbouly’s Vision:

Madbouly said the investment will help Egypt deal with the multiple crises it faces. One of them is the shortage of foreign exchange, which is causing problems. Egypt is struggling to pay off its huge debts due to a lack of cash. The purpose of this investment is to help Egypt deal with its debt problem. It could also prevent Egypt from having two different exchange rates for its currency. The one on the official rate and one on the black market.

Addressing Egypt’s Economic Crises:

For weeks, there’s been a lot of talk and speculation about a big foreign investment. There’s also been discussion about selling a large piece of land along Egypt’s northern coast. This is happening because Egypt is going through a long-lasting economic crisis. Egypt doesn’t have a lot of foreign money. This is causing the Egyptian pound to depreciate in unofficial markets against the dollar.

Prime Minister of Egypt, Mustafa Madbouly, spoke about some big projects for the economy of Egypt in start of February. He said they’re working on various projects to bring in a lot of money from other countries. Then, he mentioned the deal again on Thursday. Finally, on Friday, he talked about the projects in a press conference.

These projects will bring a lot of money from other countries into Egypt. He shared the project details in a press conference on Friday afternoon. However, started two hours late. The conference happened in the new administrative capital. Ministers from the UAE and officials from Egypt were present. Real estate magnate Hisham Talaat Moustafa was also there.

UAE’s ADQ Leads Ras al-Hikma Project:

Madbouly talked about a huge new project. However, this project is Egypt’s biggest foreign investment. Abu Dhabi Development Holding Company (ADQ) is the name of the UAE Company. However, this company is tasked with completing this mega project. This company is going to build a new city. They named that city as Ras Al-Hikmah on a vast area. The area of land is about 170 million square kilometers. However, this city is located on the northwest coast of Egypt.

Madbuly said the project is going to begin soon with the UAE putting in $35 billion. They’re going to give $24 billion in cash. However, the rest will come from changing $11 billion to investment. However, UAE already sent this amount to the Central Bank of Egypt. ADQ will use this money to start the project.

Details of the Ambitious Development Project:

He emphasized that $11 billion in reserves were already in government cash. However, their conversion into investments will reduce the debt of Egypt. Egypt commits to repaying $42 billion in debt over this fiscal year alone.

The prime minister mentioned that the money will come in two parts. Within a week, Egypt will get $15 billion. Out of this, $10 billion will be in cash and $5 billion will come from the deposit. The company will pay the second part, $20 billion, in two months. Moreover, $14 billion will be cash and $6 billion from the deposit.

Challenges and Hopes:

The plan for the city includes homes, hotels, resorts, and schools. Moreover, it will also have fun things, like entertainment spots. There will also be areas for businesses to set up, like light and tech industries, and places for ships. Additionally, there will be a financial district and a special area for businesses. ADQ and Egypt’s Aviation Ministry made an agreement. According to that agreement airport will built in the south of the city.

The prime minister assured that although a big part of the land will privatized. Egypt will still get 35% of the profits. Also, companies will create millions of jobs. They will come from building and keeping the city.

IMF Discussions and Economic Outlook:

The government has struggled to make money. Moreover, they’ve done so by selling state-owned businesses. Moreover, they haven’t made progress on making the changes they agreed to with the IMF. Because of this, the IMF decided to postpone the provision of additional funds in 2023.

The situation got really bad earlier this year. Because the value of the dollar went up a lot compared to the Egyptian pound. It reached over LE70 on the unofficial market, which is more than twice the normal rate. People are still talking with the IMF (that’s like a financial helper for countries). Moreover, they’re saying it’s really important to lower the value of the Egyptian pound. Madbuly stated on Friday that he hopes to obtain more funding. He believes this will assist in improving and stabilizing the economy.