UAE and Saudi Arabia’s brotherly role in stabilizing Egyptian economy post-June 30 revolution

Ahmed Adel

The GCC countries, especially the United Arab Emirates and the Kingdom of Saudi Arabia, played a prominent role in supporting Egypt after the June 30, 2013 revolution in the face of the difficult economic repercussions at that time, which contributed to giving confidence to the Egyptians in countering the machinations of the terrorist Brotherhood.

The deep ties have reached a climax since the June 30 revolution and the overthrow of the Brotherhood’s rule, as the government of former Egyptian Prime Minister Dr. Hazem Beblawi began its work, backed by a package of economic aid estimated at about $12 billion provided by the Kingdom of Saudi Arabia ($5 billion), the UAE ($4 billion) and Kuwait ($3 billion), and 50% of the value of this aid came in the form of non-refundable cash grants and in-kind oil and gas derivatives.

According to a statement issued by the Egyptian Ministry of Finance at the time, the Kingdom of Saudi Arabia deposited $2 billion with the Central Bank of Egypt (CBE) in March 2016, in addition to grants it provided to Egypt estimated at $1.6 billion, while the UAE placed $2 billion in the CBE and provided grants cash estimated at $1 billion, in addition to grants in kind estimated at $1.2 billion, totaling $4.2 billion. Kuwait provided a grant estimated at $2.7 billion, depositing $2 billion in the central bank and $700 million in in-kind grants.

According to the Finance Ministry statement, the aid that was placed as deposits with the CBE are considered aid that will be refunded, whereas cash and in-kind grants are considered non-refundable aid, amounting to $4.7 billion, while deposits were placed in the central bank without the slightest interest.

While the bulk of the non-refundable aid and grants program from both Abu Dhabi and Kuwait included a major part of providing Egypt with new and increasing batches of fuel and liquid gas, so that these quantities would be intensified before mid-2014 in order to avoid major bottlenecks at gas stations due to the agricultural harvest season for summer crops, in addition to reducing the problem of successive electricity outages that occur in Egypt.

Indeed, the petroleum aid provided by the Gulf states during 2013 contributed to meeting an important proportion of the needs. Egypt received Gulf petroleum aid during the second half of 2013 estimated at $4 billion.

In February 2014, the UAE government began providing Egypt with new petroleum aid, which extended for three months. This aid included shipments of gasoline, diesel and fuel.

This assistance would have contributed to the implementation of an urgent plan to revitalize the economy in order to achieve a number of indicators, including reducing the budget deficit to 10% in the fiscal year 2013/2014, in addition to contributing to increasing GDP growth to 3.5% before mid-2014 instead of 1.2% at the end of June 2013. The increase in production contributed to addressing the deficit in the state budget and balance of payments, in addition to supporting foreign exchange reserves, reflecting the improvement in economic performance as a whole.

This aid supported Egypt’s foreign exchange reserves, brought it to safe limits, and prevented the local currency from falling significantly against the dollar, which meant controlling the state’s public budget deficit, since Egypt imports more than half of its commodity needs.