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Saudi Arabia signs deals worth $15bn with Egypt

Saudi Crown Prince Mohammed bin Salman receives Egyptian President Abdel Fattah al-Sisi, in Jeddah, Saudi Arabia, July 16, 2022. Saudi Press Agency/Handout via REUTERS ATTENTION EDITORS - THIS PICTURE WAS PROVIDED BY A THIRD PARTY Saudi Press Agency via Reuters
President Abdel Fattah El Sisi and Crown Prince Mohammed bin Salman at a previous meeting in Jeddah: investments are expected to include renewable energy, desalination and real estate
  • Investment deals signed in Cairo
  • Likely to include energy and tourism
  • Egypt-Saudi electricity project

Egypt and Saudi Arabia provisionally agreed investment deals worth a combined $15 billion following the meeting of President Abdel Fattah El Sisi and Crown Prince Mohammed bin Salman in Cairo on Tuesday.

Speaking to Al Arabiya TV on Wednesday, the head of the Saudi-Egyptian Business Council, Bandar Al-Ameri, said that the deals include projects in renewable energy, industry, real estate development, tourism and technology.

The news follows comments made by Mostafa Madbouly, Egypt’s prime minister, in September that the kingdom was considering a $5 billion investment package in Egypt.

In August, Saudi investment minister Khalid Al-Falih also said that Saudi Arabia intends to convert its $10 billion in deposits in the Central Bank of Egypt to investments, reminiscent of a deal Egypt struck with the United Arab Emirates in February to secure development rights to Ras El-Hekma.

The details of new Saudi investments have not yet been announced, although the kingdom had previously been linked to various projects in different stages of negotiations. Sectors of key interest include renewable energy, water desalination, real estate and tourism.

In particular, the prospective Red Sea resort of Ras Gamila in south Sinai has long been touted as a potential Saudi project.

The government has indicated it is actively courting developers for this site, as well as that of Ras Banas in the south of Egypt, which housing minister Sherif El Sherbiny said last month was targeted for a Ras El-Hekma-style deal.

Madbouly announced in a press conference on Thursday that the Egyptian-Saudi electricity interconnection project will become operational by June 2025.

The first phase of the project will have a capacity of 1.5 gigawatts (GW) and the project’s total capacity will be 3GW.

The Egyptian government has previously indicated it hopes the new connection will be a big step towards addressing the widening energy deficit, which led to widespread blackouts and load shedding across the country this summer.

World Bank forecast

The World Bank trimmed Egypt’s growth forecast for the financial year 2024-25 from 4.2 percent to 3.5 percent following the escalation of hostilities in the region.

Egypt had already reined in its ambitious tourism targets in May by between 8 percent and 14 percent, although it still expects visitor numbers to reach a record high this year amid a large investment drive and campaign to boost inbound tourism.

In the best case scenario, the World Bank predicts that Suez Canal revenue, a major source of foreign liquidity to Egypt, will drop compared to the previous financial year from $8.8 billion to $4.8 billion. 

This is based on the assumption that the war in Gaza and Lebanon does not escalate to a regional conflict, which would have a more dramatic economic impact.