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Egypt to unveil two major projects similar to Ras El-Hekma within two months – Dailynewsegypt

Egypt is poised to announce two additional large-scale projects, mirroring the recently unveiled $35bn Ras El-Hekma development deal with the UAE, sources close to the matter told Daily News Egypt. This news comes as Egypt seeks to bolster its economy and stabilize its foreign exchange market.

Ras El-Hekma agreement announced Friday, involves a $24bn for the development rights for Ras El-Hekma and the conversion of $11bn deposits in the Central Bank of Egypt (CBE) to be utilised for investment in prime projects across Egypt to support its economic growth and development. This investment is expected to create millions of jobs and inject significant liquidity into the economy.

Sources told Daily News Egypt that the two new projects will be revealed within the next two months. Details remain scarce, but they are expected to be similar in scope and ambition to the Ras El-Hekma project.

The Ras El-Hekma development will be done through a private consortium led by Abu Dhabi-based investment and holding company ADQ.

The sources explained that the Ras El-Hekma Development Company has been established, and support work will commence within two months.

This deal is expected to boost the North African nation’s dollar revenue and allow Egypt to liberalise the exchange rate, eliminating the parallel market and easing the two-year currency crisis.

Egyptian Prime Minister Mostafa Madbouly confirmed Friday that the $35bn will be received within two months.

The US dollar pricing in the deal will be based on the official USD price. The funds will be given to the CBE, which will convert it to local currency for development, the sources indicated.

The Egyptian government will retain a 35% stake in the Ras El-Hekma development. “Profits are expected to begin within 4-6 years, with the $150bn investments injected over 30 years,” the sources explained.

The office of Matouk Bassiouny played the role of legal advisor to ADQ, while Baker McKenzie played the role of legal advisor to the Egyptian government represented by the New Urban Communities Authority.

Mohamed Hassan Alsuwaidi, Managing Director and Chief Executive Officer of ADQ, said: “This investment underscores our commitment to developing Ras El-Hekma into one of Egypt’s most attractive coastal destinations through the enablement of mega-infrastructure and development projects, working with partners such as Modon Properties and Talaat Moustafa Group, which will deliver value across multiple sectors of Egypt’s vibrant economy.”‍‍

For her part, Julie Kozak, Director of the Communications Department at the International Monetary Fund (IMF), said Thursday: “We continue to make excellent progress in the discussions on the comprehensive policy package to reach agreement at the staff level on the first and second combined review within the framework of the reform program supported by the IMF.”

Ras Al-Hekma deal is bullish for EGP and provides an opportunity for Egypt to restore two-way liquidity in the FX market, as the inflow of FX from UAE should provide the Central Bank of Egypt with sufficient liquidity to clear the FX backlog and clear the FX market in the coming days or weeks, Goldman Sachs said in a Friday report.

Ras El-Hekma is a coastal region in Egypt located approximately 350 kilometres northwest of Cairo. The significant investment marks a pivotal step towards establishing Ras El-Hekma as a leading first-of-its-kind Mediterranean holiday destination, financial centre and free zone equipped with world-class infrastructure to strengthen Egypt’s economic and tourism growth potential.

Spanning over 170 million square metres, Ras El-Hekma will be a next-generation city consisting mainly of tourism amenities, a free zone and an investment zone combining, among other things, residential, commercial, and recreational spaces with seamless connectivity domestically and internationally.

Morgan Stanley Bank said that the UAE investment deal paves the way for Egypt to adjust the exchange rate of the pound, “which we believe will be the last step before concluding an agreement with the IMF for a financing program worth more than $10bn, likely before the month of Ramadan.”

The bank expected the US dollar exchange rate against the Egyptian Pound to continue to decline in the parallel market during the next week after non-deliverable 12-month EGP futures contracts declined to EGP 57.5 from EGP 62 per USD following the deal’s announcement.

Morgan Stanley said that the money that Egypt will receive in FX inflows for the Ras El Hekma deal within two months is equivalent to foreign direct investment flows into the country in 3 years and 9% of the gross domestic product.