Egypt is making strides in its efforts to develop the Ras Banas area, a remote 30-kilometer peninsula on the Red Sea coast, as part of its strategy to attract substantial investments and address ongoing economic challenges. This initiative comes as the North African nation grapples with record inflation, mounting debt, and currency instability over the past two years.
Sherif el-Sherbiny, Egypt's Housing Minister, recently announced that a strategic and investment blueprint for Ras Banas is nearing completion. The government plans to present this proposal to potential investors in the near future, signaling a push to capitalize on one of the few undeveloped stretches of Egypt's coastline.
The focus on Ras Banas follows a significant $24 billion deal earlier this year, which granted a UAE sovereign fund the rights to develop the Ras El Hekma peninsula on Egypt's Mediterranean coast. This transaction has sparked speculation about potential follow-up agreements involving Gulf investors, particularly Saudi Arabia.
A finance ministry source has indicated ongoing discussions about converting Saudi deposits at the Egyptian central bank into direct investments. Currently, Saudi Arabia holds $5.3 billion in medium to long-term deposits and an additional $5 billion in short-term deposits at Egypt's central bank.
In a recent development, Egypt's cabinet announced that the Saudi Public Investment Fund would invest $5 billion in the country. This announcement came after a meeting between the Egyptian Prime Minister and Crown Prince Mohammed bin Salman. The news has had a positive impact on Egypt's financial markets, with government bonds rallying in response.
Egypt's pursuit of large-scale investments is driven by its need to overcome a prolonged economic crisis. The country has faced challenges including:
- Record-high inflation rates
- Increasing debt burden
- Sharp currency devaluations
- Reduced Suez Canal revenues due to Houthi attacks on Red Sea shipping
These economic pressures have been further exacerbated by a persistent foreign currency shortage. However, recent developments, such as the Ras El Hekma deal with Abu Dhabi's ADQ and securing billions in funding from international lenders, have provided some relief.
As Egypt continues to navigate its economic challenges, the development of areas like Ras Banas represents a crucial strategy in attracting foreign investment and stimulating growth. The success of these initiatives could play a significant role in shaping Egypt's economic future and its relationships with key regional partners.