MBS Bets on Egypt’s Fragile Economy

For the first time since 2022, Saudi Crown Prince Mohammed bin Salman (MBS) visited Cairo last week to meet with Egyptian President Abdel Fattah El-Sisi. Their meeting, coupled with Saudi Arabia’s recently announced $5 billion investment in Egypt, reflects a shift by Riyadh away from unconditional aid toward investments contingent on reforms that promote long-term stability, at least in theory.

Since the 2013 coup that brought Sisi to power, Egypt’s economy has struggled. By 2022, the poverty rate in Egypt stood at 33 percent, up from 26 percent a decade earlier. Cairo’s efforts to curb the country’s 26 percent inflation rate include cutting subsidies on essentials such as bread, increasing its price fourfold. Amid such challenges, Saudi Arabia has served as an economic lifeline for Egypt, providing tens of billions of dollars in aid, loans, and investment.

In September 2024, after months of efforts to attract foreign investors, Egypt’s Prime Minister Mostafa Madbouly announced that Saudi Arabia plans to invest $5 billion in the Egyptian economy “as an initial phase” of a larger investment package. Madbouly said the package will include “projects that will be decided mutually later in important economic sectors.” Following their meeting on October 15, Sisi and MBS signed an agreement to promote and protect mutual investments and established a supreme coordination council, chaired by the two leaders, to strengthen bilateral cooperation. In addition, one day after Sisi met with MBS, the head of the Saudi-Egyptian Business Council — a Saudi governmental body  — said the Saudi private sector plans to inject $15 billion into Egypt’s economy.

These initiatives reflect a shift that dates back to the 2023 World Economic Forum, where Saudi Arabia’s finance minister, Mohammed al-Jadaan, announced a change in how the Kingdom would provide economic aid. “We used to give direct grants and deposits without strings attached,” he said, “And we are changing that. We are working with multilateral institutions to actually say, ‘We need to see reforms.’”

Specifically, the privatization of Egypt’s economy is a priority for Saudi Arabia as well as other Gulf states and multilateral institutions such as the International Monetary Fund and World Bank. Despite long-standing promises from Sisi, progress on limiting military control over the economy has lagged, and the armed forces continue to dominate many sectors, including agriculture, seafood, mining, general contracting, and infrastructure.

Ensuring Egypt’s stability is fundamental to Saudia Arabia’s regional strategy. Egypt is a pivotal partner in countering Iranian influence and plays a critical role securing the Red Sea, a key route for global trade and energy. The Red Sea is also integral to the Kingdom’s tourism ambitions, which include development of NEOM, a “futuristic city” near the Saudi coast that is intended to “attract foreign investment and international corporations, increasing Saudi Arabia’s non-oil-generated wealth.”

Moreover, Saudi investment not only helps bolster Egypt’s economy but also demonstrates Riyadh’s skill in tackling difficult economic challenges. This, in turn, reinforces its leadership role in the Arab world.

While the kingdom’s support for Cairo is aimed at promoting Egypt’s economic stability, the likelihood of implementing the necessary reforms remains slim. Despite Riyadh’s conditioned investments, Cairo’s longstanding inability to privatize will remain a challenge. If this persists, Egypt risks squandering Saudi backing and missing out on other international investments, entrenching itself in economic decline.

Mariam Wahba is a research analyst at the Foundation for Defense of Democracies (FDD). For more analysis from Mariam and FDD, please subscribe HERE. Follow Mariam on X @themariamwahba. Follow FDD on X @FDD. FDD is a Washington, DC-based, nonpartisan research institute focused on national security and foreign policy.