According to Bloomberg article published on January 11, 2023, Egypt’s Gulf allies need to deliver on billions of dollars of investment pledges on schedule to ensure the North African country covers its external funding gap in the coming years, the International Monetary Fund said.
A $3 billion agreement with the IMF signed in December is due to unlock even larger funds from Egypt’s international and regional partners. The Washington-based lender on Tuesday described investments from Gulf Arab nations as “a critical part of the program’s financing strategy.”
Egypt’s planned sale of state-owned stakes in some major companies and the promised Gulf investments “need to materialize in full and under the projected timeline” to ensure the 46-month program is fully financed, the IMF said in a report. Estimating a combined $6.7 billion of Gulf investments in the next three fiscal years, it noted that such “financing assurances for the program period carry risks.”
As the Middle East’s most populous country reeled from the economic impact of Russia’s invasion of Ukraine last year, countries such as Saudi Arabia, the United Arab Emirates and Qatar pledged more than $20 billion in deposits and investments. The goal was to shore up a country that’s seen as a regional linchpin.
So far only a fraction of the pledged investments have come to fruition. The focus on investments marks a shift from previous support Gulf countries have given to Egypt, which was mainly in the form of deposits.
The Gulf nations are prepared to roll over previous deposits they made at Egypt’s central bank until the end of the IMF program, the fund said.
Selling the state-owned assets to investors is part of a wider initiative to reduce the role of the public sector in Egypt’s economy, in line with IMF advice.
