March 1, 2024

Such a major agreement could boost the Egyptian economy, which is facing a dire foreign exchange crisis.

The United Arab Emirates is in advanced talks to purchase and develop a large piece of land on Egypt’s Mediterranean coast in a deal that could bolster the troubled economy of the North African nation.

An UAE consortium has been picked to work with Egyptian partners to develop the land in Ras el-Hekma, about 350km (217 miles) northwest of Cairo, an Egyptian official was quoted by CNBC Arabia on Wednesday as saying.

Hossam Heiba, the chief executive officer of the state-run General Authority for Investment and Free Zones, told the broadcaster that the initial estimate for the total project was $22bn and that an agreement was expected soon. He did not provide further details, nor name any companies or entities.

On Thursday, Egypt’s cabinet said the government was preparing to announce new projects that will “earn huge amounts of foreign currency” and create hundreds of thousands of new jobs in an apparent reference to a multibillion-dollar development planned along the Mediterranean coast in an area of upscale luxury resorts.

The emirate of Abu Dhabi, one of seven in the UAE and the country’s capital, is involved in the project, according to unnamed people familiar with the talks quoted by US outlet Bloomberg, which also reported that Egypt may retain ownership of about 20 percent of the vast territory spanning 180 million square metres.

It said the minority stake would include a share for the Talaat Moustafa Group, a real estate developer, and some Egyptian state entities, adding that no final decision has been taken.

The major deal could strengthen ties between Egypt and the UAE, a chief backer of Egyptian President Abdel-Fattah el-Sisi that has previously offered economic support in the form of investments or other assistance.

Egypt is dealing with its worst foreign exchange crisis in decades, having undergone several currency devaluations, and is expected to enact another one soon – its fourth since early 2022.

A foreign currency boost could also positively impact Egypt’s talks with the International Monetary Fund (IMF) on a major loan, that may bring in other partners and secure some $10bn in financing.

Egypt is due to repay heavy foreign debts this year and the IMF has been pushing it to sell state assets, make space for the private sector and allow its currency to trade flexibly.

An IMF team was in Egypt last month to negotiate the revival and possible expansion of a $3bn loan agreement which faltered soon after it was signed in December 2022.

Egypt, along with Qatar, is a key mediator in talks aimed at ending Israel’s war on Gaza, starting with another pause in hostilities and the exchange of Palestinian prisoners held in Israeli jails for captives being held in the enclave.

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