Saudi Arabia to support Egypt despite oil slump

The drop in global oil prices will not deter Saudi Arabia from supporting Egypt’s economy, its ambassador said on Thursday, adding Riyadh’s support would help ease an acute dollar shortage and reduce pressure on the government budget.

“The confidence of the Arab and Saudi investor will increase after the announcement of the increase in investments,” Ahmed al-Qattan told a news conference in Cairo. “These Saudi-Egyptian relations will gain in strength day after day.”

He said Saudi aid would help Egypt push ahead with an energy subsidies reform program that seeks to reduce spending on petroleum products from its current level of about $600 million a month.

Meanwhile, Saudi Arabia’s planned $8 billion of investments in Egypt are likely to arrive over the next three years and focus on infrastructure projects, the deputy head of the Saudi-Egyptian Business Council said on Thursday.

Saudi Arabia’s King Salman said on Tuesday that his country’s investments in Egypt should exceed $8 billion (30 billion Saudi riyals) and that the oil-exporting Gulf kingdom would help meet Egypt’s petroleum needs for the next five years.

He did not give details and Egyptian officials have said that specific projects were largely still under discussion.

Egypt received pledges of $12 billion from Gulf Arab allies at an investment conference in Sharm al-Sheikh in March, where President Abdel Fattah al-Sisi urged foreign investors to help Egypt recover from turmoil that has undermined the economy since the 2011 uprising that overthrew Hosni Mubarak.

About $6 billion was quickly deposited in Egypt’s central bank to help replenish its dwindling foreign currency reserves. The rest was to come as investments, much of which are still being negotiated.

“The investments that the Saudi (king) ordered are all new government investments,” Abdallah bin Mahfouz, the deputy head of the Saudi-Egyptian Business Council, told Reuters by telephone.

“I expect that the implementation period would be three years and be directed towards infrastructure as well as some of the logistical, industrial and commercial projects that were announced at Sharm al-Sheikh.”

Gulf countries have showered Egypt with billions of dollars in grants, investments and petroleum aid since mid-2013, when then-military chief Sisi removed the Muslim Brotherhood from power following mass protests. Sisi went on to win a presidential poll.

[With Reuters)