(Bloomberg) -- Egypt said Saudi Arabia’s sovereign wealth fund is poised to invest $5 billion, in what would be the latest Gulf funding for the North African nation that’s emerging from its worst economic crisis in decades.
The kingdom’s crown prince ordered the Public Investment Fund to take the step as a “first phase” of new Saudi investment, Egypt’s cabinet said late Monday in a statement. It didn’t give a timeframe nor say what the funds would be invested in.
The announcement followed meetings in the Saudi capital Riyadh between Egyptian Prime Minister Mostafa Madbouly and both Crown Prince Mohammed bin Salman and Saudi investment minister Khalid Al-Falih.
Gulf countries are a key source of investment for Egypt, which is coming out of two years of turmoil after securing a $57 billion global bailout led by the International Monetary Fund and United Arab Emirates. The UAE provided a mammoth $35 billion in a deal that included development rights for a prime spot of Mediterranean beachfront.
It wasn’t immediately clear if the Saudi funds would be fresh money. In the early days of Egypt’s foreign currency crunch in March 2022, Saudi Arabia deposited $5 billion in the country’s central bank and pledged $10 billion in investments. The PIF set up a new company to invest in Egypt, but the deals that have materialized so far have only totaled about $1.3 billion.
It’s possible the deal could see those existing Saudi deposits converted into investments. The UAE’s megadeal announced in March included $11 billion already held at Egypt’s central bank.
Saudi Arabia may also be eyeing developing a stretch of Red Sea coastline, having shown preliminary interest in Ras Gamila, a spot in southern Sinai.
Madbouly said in televised comments in Riyadh on Monday that Egypt was working to resolve a series of disputes with Saudi companies by the end of this year. He didn’t give details on the issues or firms involved.
Talks between the kingdom and Egypt stalled last year over the purchase of Cairo-based United Bank amid a disagreement over how to value the transaction. Egypt’s pound has plunged about 40% against the dollar since then, in a devaluation that helped authorities secure IMF and other support.
--With assistance from Mirette Magdy.
(Updates with background and context.)
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