Egypt to face Gulf pressure for economic reform

Significance

Riyadh and Abu Dhabi have poured in billions of US dollars to stabilise Egypt over the last few years, most recently via the central bank. However, as both states look to diversify their economies and can rely less on hydrocarbon windfalls, they are reassessing their approach to Egypt.

Impacts

• Egypt's government will encourage the Gulf states to participate actively in its state-asset divestment programme.
• Living conditions will remain difficult, but the government will clamp down quickly on any protests.
• Qatar and Kuwait may lag Saudi Arabia and the UAE in investing in Egypt.
• The IMF will push Egypt to pursue reforms that would level the playing field between the private sector and state-owned enterprises.