Gulf Arab Allies Pledge $12bn To Egypt At Summit

Gulf Arab allies pledged a further $12 billion of investments and central bank deposits for Egypt at an international summit on Friday, a big boost to President Abdel Fattah al-Sisi as he tries to reform the economy after years of political upheaval.

Kuwait, Saudi Arabia and United Arab Emirates each offered $4 billion to Egypt, which is grappling with Islamist insurgents as it seeks to improve the investment climate four years after a popular uprising that touched off protracted turmoil.

The UAE said it would deposit $2 billion of its pledge in the Egyptian central bank, while Saudi Arabia said $1 billion of its pledge would go to the bank. Oman said it would give Egypt $500 million in grants and investment over the next five years.

Egypt hopes the conference will project an image of stability and improve investor confidence hit by the political upheaval touched off by the fall of veteran ruler Hosni Mubarak.

Cairo wants to double foreign investment in this fiscal year to $8 billion, despite an Islamist insurgency in northern Sinai and frequent militant attacks across the country.

“I’m expecting here to see $15-$20 billion in agreements signed,” Investment Minister Ashraf Salman told Reuters earlier, adding that the deals would cover power plants, real estate and agricultural projects.

General Electric said it would invest $200 million in a manufacturing and training facility which it sees as part of an economic hub being built near the Suez Canal.

It also said it had delivered 34 gas turbines to Egypt as part of a $1.9 billion power project.

Egypt also expected to sign several memoranda of understanding at the conference, including one for the construction of a new administrative capital.

Housing Minister Mostafa Madbouli said the new city east of the teeming capital Cairo would be built in 5-7 years at a cost of $45 billion and house government buildings, diplomatic missions and more than a million residential units.

“We are talking about a world capital,” he said.

REFORMS PRAISED, BUT MORE NEEDED

The conference shaped up as an important test of Egypt’s reform agenda under Sisi, a former army chief who wants to remove investment barriers to help turn around the ailing economy of the Arab world’s most populous country.

Sisi’s crackdown on Islamists and secular opponents has drawn fire from human rights groups. But he has won praise from foreign investors by cutting fuel subsidies that imposed a heavy burden on the state and by implementing other reforms.

He told the conference that his vision for Egypt’s economy centred on improving state finances and encouraging private sector investment through legislative reforms and respecting contracts in order to achieve growth rates of six percent over five years and reduce unemployment to 10 percent.

The head of the International Finance Corporation (IFC), a global development institution, said he was encouraged by Egypt’s reforms but called for further action.

“We are happy to see that progress but there is a lot more work that needs to be done. The sign is positive, we need to see more,” Jin-Yong Cai told Reuters at the conference.

On Thursday, Sisi ratified an amended investment law designed to create a one-stop shop for investors who previously needed stamps of approval from dozens of government agencies.

“The new investment law is an important step in the right direction. But Egypt can go further in dismantling inefficient regulations,” International Monetary Fund Managing Director Christine Lagarde told the conference.

Citing the World Bank, she noted that it takes on average more than 60 days to register property and over 1,000 days to enforce a contract in Egypt.

U.S. Secretary of State John Kerry, in attendance with other top officials, pledged support for Egypt’s reform agenda.

“We will work with you to absolutely secure the ambitious and important goals that you have laid out here today. There is absolutely no question that the emergence of a strong, prosperous and democratic Egypt is critical for the development of a strong, prosperous region,” Kerry said.

Saudi Arabia, Kuwait and the UAE, which backed the Sisi-led army overthrow of Islamist President Mohamed Mursi in July 2013 following mass unrest against his rule, have kept Egypt’s economy afloat since then with $23 billion in oil shipments, cash grants and central bank deposits.