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UAE invests $35bn to develop Ras Al Hekma City in Egypt – Dailynewsegypt

Egypt and the United Arab Emirates (UAE) signed a real estate investment deal on Friday, granting Abu Dhabi Developmental Holding Company (ADQ) the rights to develop the Ras Al Hekma project for $24bn. The deal aims to transform the area into a thriving destination, with an additional $11bn in deposits to be used for investments in key projects across Egypt to support its economic growth and prosperity.

Ras Al Hekma Development

Ras Al Hekma is a coastal area located approximately 350 kilometres northwest of Cairo. This investment marks a pivotal step towards establishing Ras Al Hekma as a premier Mediterranean vacation destination, a financial hub, and a free zone equipped with infrastructure to boost Egypt’s economic and tourism growth potential. The Egyptian government will retain a 35% stake in the Ras Al Hekma development project.

Investment Details

Egyptian Prime Minister Mostafa Madbouly revealed during the press conference announcing the agreement that the $35bn in foreign direct investment, expected to be received in full within two months, will be distributed as follows: $24bn in cash liquidity and $11bn from UAE deposits at the Central Bank of Egypt, which will be converted into Egyptian pounds and used for development work.

The project is expected to attract up to $150bn in investments throughout its development phase, which will help create “millions” of jobs and inject liquidity into the Egyptian economy.

Statements from Key Figures

Mohamed Hassan Al Suwaidi, Managing Director and CEO of ADQ, said in a statement: “The investment in Ras Al Hekma aligns with our commitment to transforming the area into one of the most prominent coastal destinations by enabling key development and infrastructure projects. We will work with partners such as Modon Developments and Talaat Moustafa Group to create opportunities across multiple sectors in Egypt’s diverse economy.”

Impact on Egypt’s Economy

Egypt is facing a difficult economic crisis, exacerbated by geopolitical tensions in the region, in addition to a shortage of foreign currency due to declining remittances from expatriates and falling export rates. These inflows are expected to contribute to alleviating the country’s dollar crisis.

Positive Market Reaction

Egyptian foreign bonds rose on the back of the deal announcement, becoming the best-performing sovereign debt in emerging markets on Friday. Government dollar bonds maturing in 2051 jumped 4.5 cents on the dollar, recording a record jump, according to Bloomberg data.

IMF Deal and Future Outlook

Madbouly said during the press conference that the agreement puts Egypt “very few steps away” from reaching a new agreement with the International Monetary Fund (IMF).

Goldman Sachs expects the deal to provide “sufficient liquidity (alongside the large IMF program) to cover Egypt’s financing gap over the next four years.” The expected foreign currency inflow is expected to provide the Central Bank of Egypt with sufficient liquidity “to settle accumulated foreign currency requests and the parallel market in the coming days or weeks.”

Goldman Sachs believes that the deal will be a supportive factor for the Egyptian pound and will provide Egypt with an opportunity to regain liquidity in the foreign exchange market in the coming days and weeks.