Egypt, Saudi Arabia forging closer ties with investment boost
Economics Professor Hamed Morsi said the Saudi aid is bound to boost the Egyptian economy
Egypt and Saudi Arabia are boosting ties on various fronts, particularly military and economic. Following the announcement of the formation of the Muslim anti-terrorism coalition, led by Riyadh and joined by Egypt, Saudi King Salman bin Abdul Aziz ordered Saudi investments in Egypt to exceed $8 billion in the coming five years, and pledged to contribute to providing Egypt with its oil needs and supporting traffic in the Suez Canal.
Economics Professor Hamed Morsi said the Saudi aid is bound to boost the Egyptian economy. “Egypt is already suffering from shortage in oil products, and the prices Saudi offers will be cheaper, which will increase growth rates and be in the best interest of the Egyptian public budget,” he said.
Morsi added that the bulk of Saudi investments in Egypt will reach around 60 billion Egyptian pounds. “This will contribute to stabilizing the value of the Egyptian pound, which has been lately devalued.”
Economics Professor Salah al-Din Fahmi said: “Those new projects will offer numerous job opportunities for Egyptian youths and will increase productivity, which eventually means increasing exports.”
Fahmi underlined the significance of supporting traffic in the Suez Canal: “While this step will not have a direct impact on Egypt’s cash reserve, it will support the Egyptian economy in general, which in turn would lead to increasing reserves.” He said the agreement was also political: “Such an offer from Saudi Arabia eliminates all rumors about a possible tension in the Saudi-Egyptian relations.”
Saeid Eissa, international relations researcher at Al-Ahram Center for Strategic Studies, agreed regarding Saudi-Egyptian relations: “Several Saudi and Egyptian journalists have been alleging that Saudi Arabia and Egypt are vying for leadership in the region, yet this aid came to refute all such claims and to confirm that bilateral relations are based on partnership and strategic alliance, and that occasional differences in points of view would never change that.”
Mohamed Fathi, director of Masters Securities Investment, said the positive impact of the Saudi aid was reflected right away on the Egyptian stock market. “In the first minutes of trading on Dec. 16, the Egypt EGX30 Index increased by 60 points and more than 2 billion Egyptian pounds, which mirrors general optimism about the future of the economy following the announcement of the aid,” he said. “The stock market will be one of the major sectors to benefit from this aid.”
Economic expert Omar Abdel Fattah said the aid would directly impact average Egyptian citizens. “This aid will help the Egyptian government in implementing a number of developmental projects that have been postponed, especially in the fields of electricity and infrastructure,” he said.
Professor of economics and funding Medhat Nafei said the aid would be administered smoothly due to the nature of the Egyptian economy, which “is among the most diverse in the Arab region and offers countless development opportunities in the fields of agriculture, industry and services. Egypt is also home to a huge labor force.”
Nafei said Saudi investors now felt it was safe to invest in Egypt “because the Egyptian state has lately embarked on a set of measures to ensure economic security such as the Suez Canal Development project, which in itself could be an ideal venue for Saudi investments.”
Ahmed Darwish, secretary general of the Egyptian Saudi Businessmen Association, said the agricultural sector would benefit from a sizable percentage of the aid. “Around 24 Saudi companies are planning to submit a request for the reclamation of 300,000 acres as part of a larger project that targets the reclamation of 1.5 million acres,” he said.
Darwish anticipated that the mega projects discussed at the Economic Conference, held at the Egyptian Red Sea resort of Sharm al-Sheikh, would be implemented as part of the aid. “Add to this the possibility of Saudi investment in already existing projects like Suez Canal development and the new capital.”
Darwish said some problems faced by Saudi investors in Egypt had not been solved yet, but this was unlikely to have a negative effect on future Saudi investments in the country. “The Egyptian government solved almost 65 percent of Saudi investors’ problems, and it is not logical that the problems faced by 20 companies, for example, would affect the investments of 3,000 companies.”
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