World Economy

Egypt Bags $19b in Investment Pledges

Egypt Bags $19b in  Investment Pledges Egypt Bags $19b in  Investment Pledges

Egypt has secured more than $19 billion in investment pledges on the first day of the investment summit held in the Red Sea resort of Sharm el-Sheikh.

Saudi Arabia, Kuwait, the United Arab Emirates and Oman on Friday pledged a combined $12.5 billion in aid to stimulate the Egyptian economy, Asharq al-Awsat reported Saturday.

Saudi Crown Prince Muqrin bin Abdulaziz announced $4 billion in aid to Egypt following a similar move by Kuwaiti Emir Sheikh Sabah al-Ahmad al-Jaber al-Sabah of $4 billion.

UAE Vice President, Prime Minister and Ruler of Dubai Sheikh Mohammed bin Rashid Al Maktoum, also pledged $4 billion in aid and investment to the Arab world’s most populated country.

The UAE said it would deposit $2 billion in Egypt’s central bank and the other $2 billion in the economy. Saudi Arabia said $1 billion of its pledged aid would go to the bank while Kuwait’s representative did not say how his country’s pledge would be divided.

The president of Oman’s state council later said his country was giving Egypt $500 million in grants and investment over the next five years.

Half of the amount given by Oman would be in the form of a “grant to support liquidity” and the other $250 million would go towards investment in projects in Egypt, Yahya bin Mahfouz said.

A number of public and private sector companies have already announced major investments in Egypt. British oil company BP announced on Saturday, the second day of the conference, that it has finalized a $12 billion deal with Egypt to develop 5 trillion cubic feet of gas resources and 55 million barrels of condensates in the West Nile Delta, according to a Reuters report.

Egypt also signed a number of memoranda of understanding with foreign states and companies worth tens of billions of dollars.

 Image of Stability

Egypt hopes the conference will project an image of stability and improve investor confidence hit by the political upheaval touched off by the fall of Hosni Mubarak.

Cairo wants to double foreign investment in this fiscal year to $8 billion, despite an insurgency in northern Sinai and frequent militant attacks across the country.

“I’m expecting here to see $15-$20 billion in agreements signed,” Investment Minister Ashraf Salman told Reuters earlier, adding that the deals would cover power plants, real estate and agricultural projects.

General Electric said it would invest $200 million in a manufacturing and training facility which it sees as part of an economic hub being built near the Suez Canal.

It also said it had delivered 34 gas turbines to Egypt as part of a $1.9 billion power project.

Egypt also expected to sign several memoranda of understanding at the conference, including one for the construction of a new administrative capital with a price-tag of about $40 billion, Salman said. He gave no details.

The conference shaped up as an important test of Egypt’s reform agenda under Egyptian President Abdel-Fattah el-Sisi, a former army chief who wants to remove investment barriers to help turn around the ailing economy of the Arab world’s most populous country.

On Thursday, Sisi ratified an amended investment law designed to create a one-stop shop for investors.

Saudi Arabia, Kuwait and the UAE, which backed the Sisi-led army the overthrow of president Mohamed Mursi in July 2013 following mass unrest against his rule, have kept Egypt’s economy afloat since then with $23 billion in oil shipments, cash grants and central bank deposits.

The government targets a budget deficit of 10 percent of gross domestic product by 2018/19, down from 15 percent last year. Unemployment, currently around 13 percent, is also a major challenge.

GDP is expected to grow by four percent in the fiscal year ending in June, up from 2.2 percent last year, officials say.