UAE allocates $4bn to Egypt

24 April 2016

Announcement of financial support came at the end of Abu Dhabi’s crown prince’s visit to Egypt

The UAE has allocated a total $4bn to Egypt, half of which will be go to the Egyptian central bank as deposits to support cash reserves of the most populous Arab nation

Egypt will receive the other half as investments, according to the UAE’s state news agency WAM.

The report appears to be referring to a previously announced pledge by the UAE to give Egypt $4bn, which was made at an investment conference in Sharm el-Sheikh last year. Other members of the six-member economic bloc including Kuwait and Saudi Arabia each also offered $4bn to Egypt at the conference.

Egypt is facing political volatility since a 2011 popular uprising over threw the government of President Hosni Mubarak. The country has failed to spur economic growth as foreign investment dwindled and tourists’ numbers fell, chocking two key sources of foreign currency for Egypt.

Egypt’s tourism sector was heavily impacted by the downing of a Russian passenger flight in October last year. The number of foreign tourists visiting Egypt in the first quarter of 2016 fell 40 per cent compared to the same period in the previous year.

Egypt’s real GDP is forecast to expand by 3.3 per cent in 2016 despite 4.2 per cent growth in 2015, according to the IMF’s 2016 World Economic Outlook.

The country’s current account deficit is also expected to widen by 5.3 per cent, from 3.7 per cent in 2015 says the Washington-based International Monetary Fund (IMF). The widening of the current account deficit was exacerbated by a 14 per cent devaluation of the Egyptian Pound earlier this year.

The announcement of $4bn allocation came at the end of a visit of Abu Dhabi’s crown prince, Sheikh Mohammed bin Zayed al-Nahayan, to Egypt on Friday. The aid shows that the UAE is backing Egypt and its economy.

The money was aimed at promoting development in Egypt, which has a “pivotal role” in the region, the WAM quoted the crown prince as saying.

Earlier this month, Egypt and Saudi Arabia signed several investment and economic infrastructure development deals, including setting up a SR60bn ($16bn) investment fund to help revive Egypt’s ailing economy.

More on: The Egypt Economic Development Conference (EEDC) held in Sharm el-Sheikh in March 2015.

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