Egypt and Saudi Arabia signed an agreement late on Saturday to set up a 60 billion Saudi riyal investment fund among other investment agreements including an economic free-zone to develop Egypt’s Sinai region, Egyptian state television reported.
The signing of the agreements took place in Egypt’s Abdeen palace in the presence of Egypt’s President Abdel Fattah al-Sisi and Saudi’s King Salman, during a rare 4-day visit to Egypt.
Egypt has struggled to spur economic growth since the 2011 uprising ushered in political instability that scared off tourists and foreign investors, key sources of foreign currency.
Egyptian state TV said the agreement was to establish “a Saudi-Egyptian investment fund with a capital of 60 billion riyals between the Saudi Public Investment Fund and the entities belonging to it and the Egyptian government and the entities that belong to it.”
A memorandum of understanding was also signed between the Saudi Public Investment Fund and the Egyptian International Cooperation Ministry to set up an economic free-zone in Sinai. No other details were announced.
The two countries also signed agreements to develop a 2250 Megawatt electricity plant with a cost of $2.2 billion, set up agriculture complexes in Sinai and develop a canal to transfer water, a statement from the Presidency said.
The statement also said that a company was set up to develop 6 square kilometers of the industrial zone around Egypt’s Suez Canal worth $3.3 billion, without giving further details.
The investments are part of a change in strategy from Saudi Arabia to focus more on financial support that will also benefit Saudi Arabia with return on investment.
Saudi Arabia, along with other Gulf oil producers, has pumped billions of dollars, including grants, into Egypt’s flagging economy since the army toppled President Mohamed Mursi of the Muslim Brotherhood in 2013 after mass protests against his rule.
Some of the projects announced on Saturday include private sector investments. Last week the deputy head of the Saudi-Egyptian Business Council told Reuters that Saudi businessmen are investing around $4 billion in projects in Egypt and have already deposited 10 percent of that sum in Egyptian banks.
Egypt is aiming for direct foreign investment of around $8-$10 billion in 2015/16.
On Friday, King Salman announced that a bridge connecting Egypt and Saudi Arabia would be built across the Red Sea. No details were given.
Egypt also signed development agreements with Saudi Arabia worth $590 million, Egyptian International Cooperation Minister Sahar Nasr said on Friday.
She said the agreements, signed with the Saudi finance minister, covered development in the Sinai peninsula, agriculture, housing and a university.
The agreements also include a memorandum of understanding between Saudi Aramco and Egypt’s Arab Petroleum Pipelines Company SUMED.