Saudi and Egypt strengthen economic ties with major investment agreement

Saudi Crown Prince Mohammed bin Salman and Egyptian President Abdel Fattah el-Sisi have signed a landmark agreement to bolster and protect mutual investments between their countries.The signing also marked the formation of the Saudi-Egyptian Supreme Coordinating Council during the Crown Prince's official visit to Egypt on Tuesday.

In mid-September, Egyptian Prime Minister Mostafa Madbouly announced at a meeting in Riyadh with members of the Saudi Chambers of Commerce and the Saudi-Egyptian Business Council that the finalization of the Saudi investment promotion and protection agreement was imminent.

He noted that the agreement would soon undergo the legislative process for official issuance in Egypt and would likely take effect within three months.

During their bilateral talks, President el-Sisi highlighted the deep historical ties between Saudi Arabia and Egypt, emphasizing their shared commitment to translating these ties into actionable outcomes.

The newly formed Saudi-Egyptian Supreme Coordinating Council, co-chaired by the Crown Prince and President, will oversee and strengthen institutional cooperation. The council is tasked with overseeing the breadth of bilateral relations and fostering continuous development in various areas, according to a statement from the Egyptian Presidency’s spokesperson.

The visit also focused on expanding economic partnership, with a particular focus on boosting trade and investment exchanges, and fostering economic integration in key sectors such as energy, transportation, and tourism.

Egypt’s dollar-denominated bonds reached their highest level in two years on Tuesday, as investors anticipated a new wave of Saudi investments following the Crown Prince's visit.

In March 2022, Saudi Arabia injected $5 billion into Egypt’s central bank, bringing the total Saudi deposits to $10.3 billion, a critical move that helped Egypt navigate the economic fallout from the capital flight of foreign investors triggered by the war in Ukraine. These funds played a crucial role in stabilizing Egypt’s foreign currency reserves.

Currently, the Saudi private sector’s investments in Egypt are valued at around $35 billion. Last August, the coastal city of Alamein in Egypt hosted extensive meetings aimed at enhancing Saudi investments in the country.

Following the discussions, Saudi Investment Minister Khalid Al-Falih emphasized the shared commitment to strengthening bilateral relations, stating, "We have clear directives from the Saudi leadership to solidify our partnership with Egypt in ways that benefit both nations."

Saudi Arabia’s sovereign wealth fund has invested around $3 billion in Egypt through its affiliated companies. Mutab Al-Shathry, the fund's representative in Egypt, highlighted the ongoing collaboration with Egypt’s sovereign wealth fund through the country’s state-owned enterprise privatization program.

One of the most significant joint initiatives is a 3,000 MW electrical grid connection between the two countries, with the first phase scheduled to be operational by mid-2025.

In recent months, Saudi Arabia has witnessed a surge of Egyptian investments, particularly in the real estate sector, attracting major Egyptian firms such as Talaat Moustafa Group, Hassan Allam Holding, Samcrete, Concrete Plus, Engineering and Construction Company, and Mountain View Group.

Data from the Saudi Ministry of Investment indicates that 30% of the investment licenses issued during the first quarter of this year were granted to Egyptian companies.