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Friday, April 19, 2024  
09 Shawwal 1445  

UAE buys entire Egyptian town for $35 billion

An advance payment of $15 billion will be made
Screengrab via UN Habitat
Screengrab via UN Habitat

United Arab Emirates has finalised a deal with Egypt to buy a coastal town named Ras al-Hikmah for $35 billion.

Egyptian Prime Minister Mostafa Madbouly said that the UAE will pay $15 billion in advance and pay the rest over two months.

The deal is the ‘largest foreign direct investment in an urban development project in the country’s modern history’, according to Madbouly.

The town will include residential neighborhoods, tourist resorts, schools, universities, an industrial zone, a central financial and business district, an international marina for tourist yachts, and an international airport

Ras al-Hikma lies about 200 km (124 miles) west of Alexandria in an area of upscale tourist resorts and white sand beaches popular with wealthy Egyptians during the summer months.

Egypt has been mired in a slow-burning economic crisis that includes a chronic shortfall of foreign currency which has led to sustained pressure on the Egyptian pound, on government spending and on local businesses.

Inflation accelerated to record levels last summer, the debt burden has been rising, and the shortage of foreign currency could deepen because of lost revenues from the Suez Canal after attacks on shipping in the Red Sea by Yemen’s Houthi movement.

IMF support

A $3 billion financial support package from the International Monetary Fund signed in December 2022 faltered after Egypt paused on a pledge to move to a flexible exchange rate regime and progress on state asset sales proved slow.

Talks with Egypt to boost its IMF loan program are making excellent progress, the IMF said on Thursday. It said Egypt needed a “very comprehensive support package” to deal with economic challenges, including pressures from the war in Gaza.

Since President Abdel Fattah al-Sisi took power in 2013, Egypt - the Arab world’s most populous country - has received tens of billions of dollars in bailouts from wealthy Gulf states.

But this avenue has largely dried up in the past two years as Gulf nations have chosen to link support to free-market reforms and seek profitable investments in some of Egypt’s most prized assets.

The economic crisis has increased pressure on Egypt’s leadership to act and scale back on massive infrastructure projects that have been a hallmark of Sisi’s rule, including a new capital.

However, Sisi has continued to insist that such mega-projects will bring in billions in foreign investment and create thousands of jobs.

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