Cairo races against time to secure a $5.4 billion Saudi deposit

The Egyptian government is seeking to finalize a $5.4 billion Saudi deposit agreement at the Central Bank of Egypt to bolster its foreign exchange reserves, according to Arab media reports monitoring economic relations between the two countries. The efforts come as part of extensive talks between Cairo and Riyadh to support the stability of the Egyptian economy amidst current regional conditions.

This step comes months after a visit by the Saudi Crown Prince to Cairo, which resulted in Saudi investment commitments reaching nearly $10 billion across multiple sectors, including energy, infrastructure, and real estate, as part of Riyadh's efforts to deepen its economic partnership with Egypt as the most populous Arab economy.

The upcoming agreement comes at a sensitive time for the Egyptian economy, which faces increasing pressure on its foreign currency resources due to declining revenues from the Suez Canal and tourism as a result of the escalating regional war involving Iran, Israel, and the United States, in addition to disruptions in Red Sea shipping caused by repeated Houthi attacks.

Economic analysts believe that Gulf financial support remains one of Egypt's most critical tools for absorbing external shocks, given its role in reassuring markets and maintaining the stability of the pound's exchange rate, at a time when the Egyptian government continues its negotiations with the International Monetary Fund as part of the ongoing economic reform program.

What do these terms mean?

**Foreign Exchange Reserves:** Amounts in foreign currencies held by a country's central bank, used to cover imports, service external debt, and maintain the stability of the local currency exchange rate.

**Bank Deposit:** A sum of money placed by a specific entity, such as a state or sovereign wealth fund, with another central bank for a specified period, aimed at supporting its foreign exchange reserves without being a direct investment.

**Economic Reform Program:** An agreed-upon plan between a country and the International Monetary Fund containing fiscal and monetary measures to improve economic performance and reduce the budget deficit, in exchange for the country receiving financing and facilities.