Submitted Saudi Arabia An offer to the government Egyptian By giving up its deposits in the Central Bank of Egypt, in exchange for completing the “Ras Jamila” deal and acquiring a number of government companies.
The deals included in the Saudi offer include Ras Jamila City, Sera Education Company (a company specializing in the educational services sector, which operates 27 schools it owns), in addition to 5 other companies in different sectors.
Press reports indicated that the offer submitted by the Saudi sovereign fund comes in exchange for waiving Saudi deposits worth $10.3 billion in the Central Bank, as Saudi Arabia owns deposits, which varied between $5.3 billion in medium- and long-term deposits, and $5 billion in short-term deposits.
The Egyptian Minister of Public Business Sector, Mahmoud Esmat, said in previous press statements that the ministry plans to offer Ras Jamila land for investment, to establish a hotel project on 50 percent of the land area, which exceeds more than 800 thousand square meters, through a partnership with the Saudi side. To develop and develop Ras Jamila, in exchange for a usufruct right to land in the region, provided that the Egyptian government provides all possible facilities to the Saudi side, by preparing the infrastructure and roads connecting the region.
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Negotiations are underway to determine the value of investment in the region through pumping dollar liquidity directly from the Kingdom’s investors to the Egyptian government.
The Ras Jamila area is located on the Red Sea coast with an area of about 860,000 square meters along the city of Sharm El-Sheikh in South Sinai Governorate. It is distinguished by its proximity to Sharm El-Sheikh International Airport, and is considered one of the best beaches with its picturesque and natural scenery, and the best area that contains the rarest coral reefs along the sea. It is also a suitable area for establishing attractive tourist hotels, due to its standard environmental requirements, as well as natural views.
Ras Jamila overlooks the islands of Tiran and Sanafir in the Red Sea, which Egypt ceded to Saudi Arabia in 2016 under an agreement to demarcate the maritime border line between the two countries, during the visit of King Salman bin Abdulaziz, in an agreement approved by Parliament and rejected by the people.
It is also located near a site chosen for the Red Sea Bridge, linking Saudi Arabia and Egypt, and announced by the King of Saudi Arabia, Salman bin Abdulaziz, during the same visit, in 2016.
Saudi Arabia said in 2018 that Egypt had pledged a large area in South Sinai to complete the city of NEOM (the Saudi Crown Prince’s project) off the Strait of Tiran, while sources reported that Saudi Arabia was close to reaching a deal worth $15 billion with the Egyptian government.
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In August 2022, the Saudi Public Investment Fund announced the launch of the Saudi Egyptian Investment Company, with the aim of developing and strengthening the investment partnership of the Public Investment Fund in Egypt, while the Fund acquired shares owned by the Egyptian government in 4 companies listed on the stock exchange worth $1.3 billion, including A. Finance for Financial and Digital Investments, Abu Qir Fertilizers and Chemical Industries, the Misr Fertilizer Production Company MOPCO, and Alexandria Container Handling.
Last March, the Saudi News Agency “SPA” said that Saudi King Salman bin Abdulaziz chaired the Cabinet session, during which he approved a set of decisions and a memorandum of understanding was approved between the Saudi Ministry of Finance and the Ministry of Finance in Egypt to establish a high-level financial dialogue. Before the spokesman for the Egyptian Prime Minister, Mohamed Al-Homsani, announced last April that several major investment opportunities were being studied to achieve the state’s goals in the field of development, and that any new deals would be announced at the time by the Council of Ministers.
The Saudi Public Investment Fund is competing with the Emirates Fund to acquire these projects, after the UAE signed the largest investment deal to develop the city of Ras Al-Hikma, worth $35 billion.
The expected total value of these Egyptian government proposals until the end of the current fiscal year 2023-2024 is about two billion dollars, after extending the government proposal program.
On the other hand, Egypt must pay more than $97 billion (about 4.65 trillion pounds) to service the external debt (debt interest and installments), a figure that observers consider to be historic and unprecedented in Egypt’s history.
The total external debt payments owed by Egypt, in terms of interest and installments, increased by about 5.4% in the period between 2024 and 2027, to $97.1 billion, due to the rise in interest rates and loan installments, according to the report on the external situation of the Egyptian economy until the end of December 2023.
The value of installments and interest on debts owed by Egypt during 2024 exceeded expectations and jumped to $36.3 billion, about $17.9 billion of which is scheduled to be paid during the first half of the year, with the remaining $18.4 billion to be paid during the second half of the same year.
Egypt’s external debt jumped by the end of 2023 to about $168.034 billion, compared to $164.522 billion in the quarter ending last September, an increase of $3.51 billion, according to data from the Central Bank of Egypt. Will the Saudi deal save Egypt from its economic crisis and debt accumulation?
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In response to this question, the researcher and writer specializing in economic affairs, Abdel Hafez Al-Sawy, said in exclusive statements to:Arabic21“The Saudi deal to acquire some Egyptian assets comes as the Egyptian government seeks to find a way out of the debt crisis to alleviate the burden of installments and interest in the coming period, in addition to allowing the Central Bank of Egypt to waive the obligation to repay those debts and foreign deposits to improve its position in the value of the assets.” foreign exchange rates and the psychological satisfaction of dealers.
Al-Sawy added that the Saudi deal to invest in Ras Jamila and a number of companies is an agreement related to contracting to provide goods or services, or to buy and sell capital assets that may cause an improvement in the exchange rate in the Egyptian market, but it is a temporary improvement, as the related debt crisis remains. Internal and external debt exists, as the draft general budget for the year 2024-2025 witnessed debt interest jumping to more than one trillion Egyptian pounds.
The researcher and writer specializing in economic affairs pointed out that the Egyptian government is still dealing with the economic crisis as a whole, the debt crisis, the exchange rate, and others, through painkillers without proposing radical solutions, as Egypt needs productive projects in agriculture, industry, and technology, not tourism projects and seizing capital assets. Financial statement.
Al-Sawy continued that what happened in the Ras El-Hikma project, which the UAE took over, and what will happen in Ras Gamila will not help solve Egypt’s chronic economic problems, whether in the trade balance, the debt crisis, or the balance of payments, adding that “privatization” operations are always in the state’s interest. Which it undertakes and acquires successful projects, as happens with the experiences of the Gulf countries in Egypt and what happened in many fertilizer and oil companies, among others.
For his part, economic researcher Samer Moussa confirmed in exclusive statements to:Arabic21“The Egyptian economy is going through a major crisis and economic solutions have been implemented to treat those crises. All that remains is the sale of assets, whether sale or usufruct, as officials claim, but in the end it is a sale of assets.
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Moussa added that the economic solutions to treat such crises are summarized in the state’s foreign exchange resources, such as the Suez Canal and tourism, and those resources at the present time may not help in the solution, and resorting to loans has become a dilapidated solution after the rise in Egypt’s external debt and the rise in debt interest, which has had an impact. On the confidence of the investor and donor countries, all that remains is to sell the assets, as happened in the Ras Al-Hikma deal and what is happening in the Saudi deal to invest in Ras Jamila.
The economic researcher pointed out that the deal represents a failure in managing the state’s resources, and the inability to obtain foreign exchange and hard currency… Therefore, these projects are offered to whoever manages them and invests in them, whether the Saudi sovereign fund, as is happening in Ras Jamila, or the Emirati sovereign fund. As happened in Ras Al-Hikma, in exchange for paying a sum of money and a percentage of the profits. Moussa pointed out that the financial gains will not return to the Egyptian people, especially since these projects are lands owned by the Egyptian army, and their gains will be for the benefit of the army’s economy and its beneficiaries. He concluded his speech with a question: What will the Egyptian government do after completing these painkillers?