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 reported. The move was aimed at strengthening the North African country’s recent agreement with the International Monetary Fund.
The Saudi state news firm said the extension would allow Egypt to open “new channels of investment with regional and foreign organizations” and negotiate an initial $3 billion deal that the Middle East’s most populous country reached with the IMF in October.
Saudi Arabia provided more important points on the terms of the extension, adding its duration. Egyptian state media commented on the announcement.
Egypt’s economy has been hit hard by the coronavirus pandemic and the war in Ukraine. Egypt is the world’s largest wheat importer, most of which came from Russia and Ukraine. In the aftermath of the war in Eastern Europe, Egypt has struggled to cope with skyrocketing inflation, which peaked at more than 16% in October.
Egypt’s “staff-level agreement” with the IMF last month is expected to last 46 months and aims to address Egypt’s inflation challenge and restructure its economy. The terms of the initial deal saw the Egyptian government introduce a series of rapid economic reforms, adding an accumulation in its key interest rates and a shift to a flexible exchange rate.
Egypt won a $12 billion bailout from the IMF in 2016, when President Abdel Fattah el-Sisi 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 to prop up its economy battered by years of political turmoil that rocked the country after the ouster of autocrat Hosni Mubarak in the 2011 revolution.
About a third of Egypt’s 104 million people live in poverty, according to government figures.
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