Egypt said on Friday it had signed a deal with the United Arab Emirates to develop a prime stretch of its Mediterranean north coast that would bring $35 billion of investments to the indebted country over the next two months.
The deal with ADQ, the smallest of Abu Dhabi's three main sovereign investment funds, is for the development of the Ras El Hikma peninsula and could eventually attract as much as $150 billion, Egyptian Prime Minister Mostafa Madbouly told a press conference.
The project would feature investment zones and residential and commercial spaces as well as tourism and recreational developments, with work expected to start in 2025, a statement from ADQ said.
Egypt's sovereign dollar bonds soared on Friday ahead of the announcement, and continued their rally into the afternoon.
Longer-dated bonds enjoyed the biggest gains, with those maturing in 2047 or beyond up more than 3 cents in the dollar to trade at 66.6-70.2 cents - for most their highest level in around a year, Tradeweb data showed.
Ras al-Hikma lies about 200 km (124 miles) west of Alexandria in an area of upscale tourist resorts and white sand beaches popular with wealthy Egyptians during the summer months.
Egypt has been mired in a slow-burning economic crisis that includes a chronic shortfall of foreign currency which has led to sustained pressure on the Egyptian pound, on government spending and on local businesses.
Inflation accelerated to record levels last summer, the debt burden has been rising, and the shortage of foreign currency could deepen because of lost revenues from the Suez Canal after attacks on shipping in the Red Sea by Yemen's Houthi movement.
IMF SUPPORT
A $3 billion financial support package from the International Monetary Fund signed in December 2022 faltered after Egypt paused on a pledge to move to a flexible exchange rate regime and progress on state asset sales proved slow.
Talks with Egypt to boost its IMF loan program are making excellent progress, the IMF said on Thursday. It said Egypt needed a "very comprehensive support package" to deal with economic challenges, including pressures from the war in Gaza.
Since President Abdel Fattah al-Sisi took power in 2013, Egypt - the Arab world's most populous country - has received tens of billions of dollars in bailouts from wealthy Gulf states.
But this avenue has largely dried up in the past two years as Gulf nations have chosen to link support to free-market reforms and seek profitable investments in some of Egypt's most prized assets.
The economic crisis has increased pressure on Egypt's leadership to act and scale back on massive infrastructure projects that have been a hallmark of Sisi's rule, including a new capital.
However, Sisi has continued to insist that such mega-projects will bring in billions in foreign investment and create thousands of jobs.
