Saudi Arabia will buy US$500 million worth in Egyptian treasury bills, and will also lend Egypt another $500m in budgetary support, the Saudi Ambassador to Egypt, Ahmed al-Qattan, has told media.
Egypt’s finance minister announced late August that Egypt was in talks with Saudi Arabia and the UAE to buy Egyptian financial instruments and help the government reduce the highest borrowing costs it has faced since 2008.
The news of Saudi entering the t-bills market drove the average yield in yesterday’s auction to 12.431 per cent from 12.609 per cent the previous week.
In May, Saudi Arabia vowed to provide Egypt with $4 billion in aid, including a $1bn deposit at the Central Bank of Egypt and $500m in bond purchases.
Saudi Arabia’s Development Fund has finalised its negotiations with the Egyptian government, whereby they will offer $1.45 billion in aid packages, according to Al Arabiya.net.
The aid packages will include $200 million for SME project financing, $500 million in low-interest loans to be invested in priority sectors, and $750 million as a credit line to import non-oil products from Saudi Arabia.
However, it is not clear when the promised funds will materialise.