Egypt Gets First of UAE Payments After $35 Billion Land Deal

Tarek El-Tablawy and Mirette Magdy
·2 min read
4

(Bloomberg) -- Egypt has received the first transfers from the $35 billion in funds pledged by the United Arab Emirates, a massive package of financing that brings closer a currency devaluation and should unlock more international assistance.

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President Abdel-Fattah El-Sisi said some of the UAE money has been deposited in Egypt’s central bank and additional installments are expected on Friday. This reflects “clear” assistance and support on the part of the Gulf state, he said during a televised event on Wednesday.

Read also: Egypt Seals Biggest Deal Ever With UAE Investing $35 Billion

The UAE commitment is giving the central bank the resources it needs to enact a much-awaited currency devaluation that would be the country’s fourth since early 2022 and potentially the largest yet. It’s an adjustment long sought by the International Monetary Fund to help increase Egypt’s current $3 billion loan — little of which has been distributed — to a package of more than $10 billion that may bring in other partners.

Read More: Egypt Talks on IMF-Led Deal Go On With $10 Billion on Table

The country’s dollar bonds extended their gains on Wednesday, continuing a rally triggered by last week’s announcement of the landmark UAE deal. The notes due in 2051, 2040 and 2048 rose more than three cents on the dollar, among the best performers of emerging-markets.

Abu Dhabi stepped in with an investment pledge Prime Minister Mostafa Madbouly described as the biggest in his country’s history, roughly equal to the size of Egypt’s entire net international reserves.

Under the terms announced on Friday, Abu Dhabi wealth fund ADQ said it will purchase the development rights to a premium area on Egypt’s Mediterranean coast known as Ras El-Hekma for $24 billion.

It also plans to invest another $11 billion — which will come from a prior deposit by the UAE in Egypt’s central bank — in additional real estate and prime projects in the country.

Read More: Egyptian Bonds Jump on UAE Deal, Pound Gains on Black Market

Madbouly said Friday Egypt expected the UAE to make upfront payments in two tranches. That will include $15 billion within a week — of which a third will come from the UAE’s deposits — and another $20 billion in two months.

“It’s not easy at all for someone to put $35 billion in two months,” Sisi said.

--With assistance from Kerim Karakaya.

(Updates with Egyptian bonds move.)

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