Saudi sovereign wealth fund PIF to invest $5bn in Egypt

Cairo says injection is 'first phase' of kingdom's investments

Egypt's cabinet said Saudi Crown Prince Mohammed bin Salman has directed his country's sovereign wealth fund PIF to invest $5 billion in the country. AFP

Saudi Crown Prince Mohammed bin Salman has directed his country's sovereign wealth fund to invest $5 billion in Egypt, the cabinet in Cairo announced on Monday.

Egypt said the $5 billion injection would be the “first phase” of Saudi investments through its Public Investment Fund. The announcement came after a meeting between Prince Mohammed and Egyptian Prime Minister Mostafa Madbouly in Riyadh.

The investment would be the latest major injection of cash the North African country has received while it recovers from its economic crisis.

The International Monetary Fund and the UAE have provided most of the funding to help support Egypt's economy.

The UAE announced a $35 billion deal with Cairo in February to develop the coastal city of Ras El Hekma, which analysts at the time said would help to boost the Egyptian economy. Abu Dhabi's investment holding firm ADQ led the consortium as part of the deal.

That was followed by an announcement from the IMF in March that would increase its bailout loan for Cairo from $3 billion to $8 billion. It approved another $820 million in funding under the programme in July.

As part of the deal, Egypt agreed to move to a flexible exchange rate policy, preserve debt sustainability and allow the economy to grow through its private sector.

During the meeting, Mr Madbouly also said Egypt has helped to resolve most of the challenges faced by Saudi investors in Egypt.

He discussed Cairo's efforts to provide resources to the electricity sector and diversify sources of renewable energy. They stressed the electrical connection between the two countries, the statement said.

They also addressed efforts made to contain regional crises, including the wars in Gaza and Yemen, as well as the Red Sea attacks by the Houthis.

Egypt's economy has faced several challenges in recent years, including high debt levels, inflation and a foreign exchange shortage.

The war in Gaza and its regional repercussions have also been a major driving force behind Egypt’s sluggish growth throughout the first half of 2024.

The war has disrupted maritime traffic in the Red Sea and resulted in a 60 per cent drop in Egypt’s Suez Canal revenue, one of the country’s main sources of foreign currency.

In a report last month, the IMF said Egypt's path to economic recovery remained challenging as it struggles with the effect of regional conflicts and attempts to meet the conditions set by its loan programme.

The Egyptian economy has shown signs of weakness in the first half of the fiscal year 2024-2025, the fund said, while noting that a rise in investor confidence has also been recorded, brought on by the flotation of the Egyptian pound in March.

Business activity in Egypt's non-oil private sector economy expanded in August for the first time in four years, as output grew on the back of higher demand.

The seasonally adjusted S&P Global Egypt purchasing managers’ index ­– a crucial gauge of the nation’s non-oil economy – rose to 50.4 in August, from 49.7 in July, staying above the neutral 50 mark that separates growth from contraction.