Egypt weighs Saudi, Kuwaiti debt swap for Red Sea land

The government is considering offering Saudi Arabia and Kuwait investment opportunities in Red Sea Governorate in exchange for converting part of their deposits at the Central Bank of Egypt into investments, as part of a plan to reduce public debt, a senior Finance Ministry source told Al Manassa.

The source said the government recently allocated land to the Finance Ministry that could be used to settle part of the debts owed to the two countries.

Saudi Arabia and Kuwait hold deposits at the Central Bank that are counted as part of Egypt’s external debt, the source said, speaking on condition of anonymity. The government is therefore considering converting part of these liabilities into direct investments, following the model of the UAE deposit swap for investments in the Ras El-Hekma project.

Last week, President Abdel Fattah El-Sisi amended an earlier decision allocating 112 million square meters in Red Sea Governorate to the Finance Ministry for the issuance of sovereign sukuk. The amendment added reducing public debt to the purposes for which the land could be used.

The Finance Ministry announced on Friday that it plans to use the land to reduce public debt by offering it to investors under usufruct arrangements or developing investment projects in partnership with the private sector. The plans also include using part of the investment proceeds to settle outstanding debts and directing project revenues toward reducing government debt and meeting its financial obligations.

Central Bank data show that long-term deposits held by the bank totaled $9.3 billion as of December 2025, including $5.3 billion from Saudi Arabia and $4 billion from Kuwait. The government had previously agreed with the UAE to convert $11 billion in deposits into investments in the Ras El-Hekma project.

The source said the government had set the usufruct period for the land, whether offered for investment or used in connection with sovereign sukuk issuance, at 15 to 20 years. The period could be renewed if the investment projects achieve their targets.

Alongside the debt-swap plan, the Finance Ministry intends to use the land as backing for domestic sovereign sukuk. This follows a previous arrangement in 2025, when the state allocated plots in the same governorate covering a total area of up to 174 million square meters. The sukuk would be backed by revenues generated from developing the land.

The Finance Ministry source said the ministry is preparing to issue domestic sukuk backed by the newly allocated Red Sea land. One tranche will have a three-year maturity and the other a five-year maturity.

The sukuk are expected to be offered in December or, at the latest, in early Jan. 2027, the source said. They will be denominated in Egyptian pounds and offer what the source described as a highly attractive return, although the rate has yet to be determined.

In its latest statement, the Finance Ministry said major investment deals help accelerate efforts to reduce public debt, which stands at around 82% of GDP.