Saudi Arabia agrees to extend terms of $5 billion aid package for Egypt

Saudi Arabia agreed on Tuesday to extend the terms of a $5 billion aid package to Egypt that took effect in March, Saudi state media said. The aim of the measure was to reinforce the North African country’s recent agreement with the International Monetary Fund.

The Saudi Press Agency said the extension would allow Egypt to open “new financing channels with regional and international organizations” and help complete a preliminary $3 billion deal that the Middle East’s most populous country arrive with the IMF in October.

Saudi Arabia did not provide further details on the terms of the extension, including for how long. Egyptian state media has not commented on the announcement.

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The Egyptian economy has been badly affected by the coronavirus pandemic and the war in Ukraine. Egypt is the largest importer of wheat in the world, most of which came from Russia and Ukraine. With the fallout from the war in Eastern Europe, Egypt has struggled to combat rising inflation, which peaked at more than 16% in October.

People crowd a street hours before a curfew in Cairo, Egypt, April 14, 2020. Saudi Arabia agreed on Nov. 29, 2022 to extend the terms of an aid package of 5 billion dollars in Egypt in March.
(AP Photo/Nariman El-Mofty, file)

Egypt’s “staff level agreement” with the IMF last month runs for 46 months and aims to address Egypt’s inflation problem and restructure its ailing economy. Under the terms of the preliminary agreement, the Egyptian government introduced a series of immediate economic reforms including a hike in its key interest rates and a shift to a flexible exchange rate.

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Egypt received a $12 billion bailout from the IMF in 2016 as the government of President Abdel Fattah el-Sissi embarked on an ambitious reform program that led to rising prices.

In recent years, regional allies Saudi Arabia and the United Arab Emirates have pumped billions of dollars into Egypt, helping to shore up its economy battered by years of political turmoil that plagued the country after the ouster of autocrat Hosni Mubarak during the 2011 revolution.

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About a third of Egypt’s 104 million people live in poverty, according to government data.