Egypt, the second largest economy in Africa, has approached the United Arab Emirates (UAE) for a $400 million loan to purchase wheat as the continuous surge in commodity prices puts strain on the budget of the North African nation.
According to Egyptian Supply Minister Ali El-Mosilhy, the Abu Dhabi Fund for Development has agreed to provide the funds in installments of $100 million once the deal is finalised.
Investors King understands that if the two countries involved in the agreement successfully come to terms, it would provide a much-needed financial boost for Egypt, which happens to be one of the world’s largest importers of wheat.
At present, Egypt is facing a severe shortage of foreign exchange, and the nation is grappling with a cost-of-living crisis.
A significant contributing factor to this crisis is the sharp increase in food prices, particularly after Russia’s invasion of Ukraine last year.
Initially, global wheat prices skyrocketed following the conflict in Ukraine. However, they have since stabilized to some extent due to substantial harvests in other regions, which helped alleviate the strain on global wheat supplies.
Nevertheless, in recent times, these prices have once again risen. The reason behind this recent increase is Moscow’s withdrawal from a Black Sea grain agreement, coupled with threats that any ships passing through Ukrainian waters would be treated as military vessels.
To aid Egypt’s economy, countries like the UAE and other Gulf states, including Qatar, have shown interest in providing support. For instance, Egypt recently revealed that the Abu Dhabi wealth fund ADQ would invest $800 million in various companies within the African nation.
This investment could potentially alleviate some of Egypt’s economic challenges and provide opportunities for growth and stability.