Qatar plans major investment in tourism and industry projects along Egypt’s Mediterranean coast over the next five years, the latest pledge of support to an economy hammered by a year and a half of political turmoil.
The projects include gas, power and iron and steel plants at the northern entrance to the Suez Canal and a giant tourist resort on the Mediterranean coast.
Egypt’s stock exchange closed at a 14-month high on Thursday on optimism that a new government with a clear popular mandate will secure investments and donor aid to stave off a balance of payments and budget crisis.
Cairo last month formally asked the International Monetary Fund for $4.8 billion in emergency funding.
“We spoke with President Mohamed Mursi and agreed to invest in a power plant, natural gas and iron steel,” Qatar’s prime minister, said Sheikh Hamad bin Jassim al-Thani recently. “This will be in a integrated complex in East Port Said.”
Sheikh Hamad was speaking at a joint news conference with Egyptian Prime Minister Hisham Kandil shortly after meeting the country’s newly elected president, Mohamed Mursi.
He said the investments in the Port Said projects would extend over five years.
Qatar announced three months after the popular uprising that toppled Hosni Mubarak that it was interested in investing near Port Said, but the plan had lain dormant since then.
In the last few months, Egypt has received more than $5 billion in loans and pledges, including $2 billion in direct budget support from Qatar and loans from Saudi Arabia and the Islamic Development Bank.
Qatar deposited $500 million in direct budget support at the Egyptian central bank in August and said it would pay the remaining $1.5 billion over the coming three months.
“We agreed on the following dates. At the end of this month will be one portion, the end of October another portion and the end of November another portion,” Sheikh Hamad said.
Meanwhile, Egypt’s central bank kept its benchmark overnight deposit and lending rates unchanged, as expected, saying it was still concerned that inflation might speed up and economic growth slow down.