In order to reduce debt: Egypt offers large areas of land on the Red Sea coast for foreign investment
A state of interaction and intense controversy raised by the decision of the President of the Republic of Egypt, Abdel Fattah El -Sisi, a few days ago to allocate a large area of land on the Red Sea coast for the benefit of the Egyptian Ministry of Finance for use in reducing and exchanging debts owed by the Egyptian state for the benefit of many countries and international organizations.
Opinions were divided between supporters of the decision as in favor of direct investment, reducing debts and finding more job opportunities, and another opinion that believes that this decision is a neglect of Egyptian lands and a threat to Egyptian national security, and a download for future generations of the consequences of the Egyptian government's expansion of borrowing from abroad.
Observers believe that the Egyptian state is seeking to conclude a "new financial rescue" deal similar to, which was won by the wealth fund in the United Arab Emirates in March 2024, at a value of 35 billion dollars.
The Official Gazette published the decision of President Al -Sisi to allocate a plot of land with an area of more than 41.5 thousand acres, which will be more than 174 square kilometers of the state -owned spaces towards the Red Sea Governorate for the benefit of the Ministry of Finance, for use for the purposes of reducing the public debt of the state and issuing sovereign sukuk in accordance with the laws and rules in force in this regard.
The Republican Decision - which has the power of influential, implemented law except by administrative methods - stipulated that the armed forces retain their ownership of military sites within the area designated as strategic areas of military importance for the purposes of defense and national security.
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External debt
The area subject to the provisions of the decision extends from the "Ras Shuqair" area to the tourist "Ras Jumsa", south of the Gulf of Suez, on the Red Sea coast.
According to some of the publications received through the official page of the Egyptian Ministry of Environment and the tourism companies operating in the region, the "Ras Shuqair" area, as well as the "Ras Benas" area is considered one of the largest gatherings of virgin coral reefs in the world, and the tongue of the head of the Ras Shuqair Peninsula extends with a length of 50 kilometers inside the waters of the Red Sea, and includes the old "Bernis" port, as it is located on the opposite side of the city of Yanbu Saudi Arabia.
With the severe controversy raised by the decision, the Egyptian Ministry of Finance issued a statement during which it confirmed that the allocation of this area of the land to the Ministry does not mean selling it but rather its use and development, with a part of it to use a guarantee to issue some sovereign instruments.
The Egyptian Ministry of Finance's statement emphasized that this land will remain under the ownership of the Egyptian state represented in the Ministry of Finance and some government agencies with economic activity with the aim of improving the financial conditions, and creating a financial space - through sovereign instruments - allowing increased spending on social protection and human development programs.
The ministry added that a portion of the land will be used to conclude some deals and partnerships with some economic bodies in the country for the purpose of replacing a portion of the debt based on the budget and financing the bill of the burden of external debt service, as these lands are developed by converting them into productive, service, tourism and real estate projects that achieve an economic return in favor of future generations, and provide more job opportunities.
Negotiations took place between Egypt and Saudi Arabia on the sidelines of the desert "Davos" forum in Riyadh last year, on the details of the terms of the deal, during which the Saudi side expressed its reservation to pay the value of the deal in cash in dollars, where the Saudi side prefers to exchange debts with land and not to pump any new money, according to some media reports.
It opens the government's appetite for further borrowing
Economic researcher, Abdel Nabi Abdel -Muttalib, former Undersecretary of the Ministry of Foreign Trade for Economic Research and Professor of Political Economics in his speech to BBC Arabic, says that the issue of restricting state property and putting them at the disposal of the Ministry of Finance is something that has existed since the establishment of the Ministry of Finance during the era of Khedive Ismail.
Abdel Nabi adds that the new thing about the matter this time is that the President’s decision referred to the plots of distinctive lands in strategic areas, and allowed the Ministry of Finance that it turned it into government "debt papers" through the sovereign bonds through which the Egyptian state can exchange debt, and then the matter goes out of investment and moves to the process of selling and this matter will not be available to the Egyptians, but it will be for the benefit of countries and international organizations.
In June 2021, the Egyptian Parliament issued the sovereign bonds law, a state financing tools issued by the state, represented by the Ministry of Finance or the competent government agency, with the aim of obtaining long or medium -term financing by selling "sukuk" that represent a common share in state -owned assets or its benefits. They are financial tools that resemble bonds, but are compatible with Islamic law, as they do not depend on interest, but rather are built on the basis of "ownership", "benefit", "leasing" or other funding formulas in Islamic law.
Egypt issued its first sovereign instrument in February 2023 at a value of $ 1.5 billion in global markets, and the demand for it was large, which indicates a global interest in Egyptian sovereign instruments.
The Egyptian economic researcher explains that some people fear that this decision is a opening for these lands to have foreign nationalities in a way that represents a danger to the Egyptian national security, and it is completely different from the topic of "Ras Al Hikma" because it is a company for foreign investment and the Egyptian government has a stake in this company, and the land of "Ras Al -Hikma" is the right to use in favor of establishing development projects that benefit the Egyptian state.
Abdel Nabi Abdel -Muttalib says that this decision contributes to reducing the external debt of the Egyptian state, but it is a temporary solution that opens the government's appetite for more loans and borrowing, and it is tantamount to downloading future generations to the problem of debt, which is not actually produced and is not in the interest of the economy, according to it.
The reason, as Abdel -Nabi Abdel -Muttalib sees, is that most of the areas of these lands will be used in real estate investment through foreign companies that sell to foreigners and Egyptians working abroad, which is a deductive balance from the share of the Egyptian state and the Egyptian real estate sector that is already filled with units that have not been exploited or sold during the past years.
No fear of investment
In an attempt to answer these questions, we asked one of the former leaders in the Egyptian Ministry of Defense, which is Major General Staff of Mohamed Al -Shahawi - the chief of staff of the chemical war in the Egyptian army and a member of the Egyptian Council for Foreign Affairs, who confirmed that the offering of this area of lands with the system of usufruct or investment is something that is in the interest of Egyptian national security, because the definition of Egyptian national security - from his point of view - is "the ability to maintain the state's entity and its capabilities In order to achieve development in various fields, and this piece will be used in private investment for the purpose of generating new and renewable energy, green hydrogen, solar energy, and wind energy. "
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For his part, Hamid Fares, a professor of international relations at Cairo University and a member of the Arab Tribal Union, says that the recent presidential decision is a decision that is in the interest of the Egyptian state, and opens new horizons for direct and indirect investments and in no way affects the sovereignty of the Egyptian state.
Fares explained that there are many countries that pursue this same way to improve the economic climate in order to create job opportunities, noting that the presidential decision also includes a very important point, which is that logistical and important lands, which are controlled by the armed forces are not subject to the decision.
In his speech to BBC Arabic, the professor of international relations indicates that when the Egyptian state is making a partnership, it does not sell all the area of the land, and there will be a "ruling stake" for the Egyptian state through which it can control the decision on these lands, referring to the land in the end that exists within the borders and control of the Egyptian state, and do not fear investment, which is a good thing that does not call for fear, he said.
External debt
According to the reports of the Egyptian Cabinet, the Egyptian government expects the financing gap in the next fiscal year budget (2025-2026) by more than 25% to reach 3.6 trillion pounds, equivalent to about 70 billion dollars, according to the price of the dollar price in the new budget.
The Ministry of Finance intends to cover the budget deficit by issuing new local debt tools, in the form of treasury bills of 2.2 trillion pounds, and treasury bonds of about 928.9 billion pounds, within the framework of a government plan aimed at increasing spending on social welfare and filling the budget deficit.
Egypt's external debts increased by 1.5% on a quarterly basis, to 155.2 billion dollars in the first quarter of the fiscal year (2024-2025), compared to 152.9 billion dollars at the end of the fiscal year (2023-2024), according to the official central bank data.
Egypt's external debt has doubled about four times during the past ten years, as a result of increasing borrowing from international donor bodies, as the debts denominated in US dollars represent more than two -thirds of the country's foreign debts.
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