Saudi Arabia to sign $20bn in financing for Egypt

06 April 2016

Agreements are expected to be confirmed on 7 April

Saudi Arabia is expected to sign $20bn-worth of energy contracts during King Salman bin Abdulaziz al-Saud’s visit to Cairo this week.

The financing deal, intended to service the Egyptian oil and gas sector’s needs for the next five years, will also include a $1.5bn package to develop the Sinai region, UK news agency Reuters cited two Egyptian government sources as saying.

Riyadh has provided financial and political support to Egypt since Mohamed Mursi’s Muslim Brotherhood-backed government was overthrown in 2013.

The Sinai region is particularly affected by Islamist insurgency, with the jihadist group Islamic State in Iraq and Syria’s (Isis’) Sinai Branch, Ansar Bait al-Maqdis, claiming resposibility for the bombing of Russia’s Metrojet Flight 9268, which killed 224 people. 

Saudi Arabia in particular has been a strong supporter of Egypt’s current government, and in March, the kingdom made significant deposits to help boost the Egyptian economy.

In early 2015, $6bn in long-term deposits from Saudi Arabia, the UAE and Kuwait boosted the North African country’s net international reserves.

The three GCC countries pledged a further $6.5bn in aid to Egypt, and there are reports they have transferred higher levels without fanfare.

Saudi Arabia’s most recent pledge of investment was made in December 2015, amounting to $8bn, although it is unclear if this is linked to the $20bn in investments set to be confirmed during King Salman’s impending visit to Cairo.

The energy financing will come with an interest rate of 2 per cent and a grace period of at least three years, according to the report.

Separately, the deputy head of the Saudi-Egyptian Business Council said on Tuesday that Saudi businessmen will invest a total of $4bn in schemes including the Suez Canal, energy and agriculture, and had already deposited 10 per cent of that sum in Egyptian banks.

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