Economic crisis in Egypt: What is Ras al-Hekma and why is Cairo “selling” it to the UAE?
Ras al-Hekma, an emerging Cape resort town 212 km west of Alexandria and 350 km northwest of Cairo, could be sold to the United Arab Emirates to bring liquidity to cash-strapped Egypt.
Ras al-Hekma is an up-and-coming resort town on a cape about 212 kilometers west of Alexandria and about 350 kilometers northwest of Cairo. It boasts stunning turquoise waters and white sandy beaches and has attracted significant investment in luxury developments, now likely from the United Arab Emirates.
The Egyptian government announces that it is developing a new sustainable and inclusive waterfront city called Ras Al Hekma Waterfront New City in collaboration with UN-Habitat to transform the north coastal region as part of future urban developments in Egypt. The first phase of the project is expected to be completed by 2028.
Ras al-Hekma recently made headlines after it was reported that the cash-strapped Egyptian government is in talks to sell it to the United Arab Emirates for $22 billion amid a currency and debt crisis that has left the Egyptian pound (EGP) on the black market downward pressure on international currencies with devastating consequences for the import-dependent country.
Will the sale of Ras al-Hekma ease Egypt's economic crisis?
Egypt's main recipe for attracting foreign exchange relies on big investments in natural gas exploration, expanding the Suez Canal, doubling tourism in a troubled region and investing billions of dollars in mega-projects (including the construction of a huge new administrative capital) in the hope To achieve this, both employ thousands of Egyptians while attracting foreign investment, mainly from the oil-rich Gulf.
This recipe worked for a while until it didn't. But that doesn't stop Egypt from doubling down on its approach while seeking a bailout from the International Monetary Fund (IMF), although this may require the kind of reforms that Egypt's military-dominated economic model cannot imagine.
The sale of Ras al-Hekma to Abu Dhabi fits this pattern of Cairo's economic behavior.
The involvement of a consortium from the United Arab Emirates was confirmed to local television channels by Hossam Heiba, CEO of Egypt's General Authority for Investments and Free Zones. According to Bloomberg, Egypt could retain a 20% stake, including companies such as Talaat Moustafa Group.
The Egyptian government said on Thursday a committee was reviewing “investment offers for important projects that are expected to generate large foreign exchange resources.”
Abu Dhabi's commitment is consistent with its history of supporting Egyptian President Abdel-Fattah El-Sisi through previous investments and economic aid. Egypt hopes that, if successful, the deal would help it deal with currency devaluations, secure liquidity and strengthen its position in talks with the IMF.
Comments are closed.