Abu Dhabi steps in to ease Egypt’s currency crisis with $35bn investment

Abu Dhabi steps in to ease Egypt’s currency crisis with $35bn investment

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Abu Dhabi has agreed to invest $35bn in a large development site on Egypt’s northwestern Mediterranean coast in a move that could ease a financial crisis in the country of around 110mn people.

The investment by state investment vehicle ADQ, which aims to build a tourism and financial centre in the Ras al-Hekma area, is central to unlocking a long-stalled agreement with the IMF for a loan package expected to top $10bn, analysts said.

Egypt has been struggling with a severe foreign currency shortage for almost two years and the IMF has made its loan conditional on Cairo allowing the currency to move to a flexible exchange rate.

However, authorities have been reluctant to allow market forces to set the value of the Egyptian pound because the central bank did not possess enough foreign exchange buffers to prevent a sharp fall against the dollar.

The official rate has been held at around E£31 to the dollar since March 2023, but it has been trading on the black market at more than twice that value.

“This deal is the missing piece of the puzzle to bring the IMF agreement over the line,” said