President Abdel Fattah El-Sisi issued Presidential Decree No. 303 of 2025, allocating a piece of state-owned land with an area of about 41,515 feddans (equivalent to 174 million square meters) in the Red Sea Governorate to the Ministry of Finance for the purpose of reducing public debt through the issuance of sovereign sukuk, in accordance with the applicable laws and regulations. The decree was published in Issue No. 23 (A) of the Official Gazette on June 4, 2025.
The decree, which holds the force of law and can only be contested through administrative channels, states that the Armed Forces will retain ownership of the military sites within the allocated area, considering them as strategic regions of defense and security importance.
The terms of the decree indicate that the land will be used as collateral for the issuance of domestic sovereign sukuk as part of the state’s plan to reduce public debt burdens, marking the latest action in a series of steps to monetize public assets for financial purposes.
Sovereign sukuk are government-issued securities of equal value, offered for a specified period of time not exceeding 30 years, and represent shares in the benefits of public assets that are defined according to the issuance prospectus.
This move comes as part of the government’s “Maximizing the Utilization of Unused State Assets” policies, which have been adopted by the Egyptian government in recent years. Sovereign sukuk is a relatively new financing tool in Egypt, activated by a law passed in 2021, and used to secure debt instruments issued in the local or international market. The allocation of this land aims to include it among the assets used as collateral for the issuance of these sukuk.
However, the decision has sparked controversy and raised questions about the ambiguity surrounding the official announcement, particularly regarding how close it is to vital areas or mining and energy zones, which could affect its future usage or its estimated value in the asset market.
The area governed by the Presidential Decree extends from Ras Shuqeir to the tourist destination of Ras Ghamsa, south of the Gulf of Suez, along the western coast of the Red Sea. Ras Shuqeir, along with Ras Banas, is among the largest untouched coral reef clusters in the world. The head of the Ras Shuqeir peninsula is known for extending into the Red Sea for a distance of up to 50 kilometers. The area includes the old Berenice port and lies opposite the city of Yanbu, Saudi Arabia, on the opposite shore of the sea.
Privatizing Sovereign Resources and Increasing Debt
Following the questions raised by the decision on social media, and in an attempt to contain the widespread controversy, the Egyptian Ministry of Finance issued an official statement on June 12, confirming that the allocation of the mentioned land to the ministry does not mean selling the land or relinquishing ownership. Rather, the goal is to use and develop it as part of a comprehensive plan to maximize the utilization of public assets.
The statement clarified that the land will remain state-owned, represented by the Ministry of Finance and some other government entities with economic activities. The purpose of allocating the land is to use part of it as collateral for issuing sovereign sukuk, aiming to improve public financial indicators and create fiscal space that allows for increased spending on social protection programs and human development.
In the same statement, the Ministry of Finance explained that the procedures related to the land allocation and the issuance of sovereign sukuk are part of a broader strategy to improve public financial indicators by reducing government debt, stimulating the economy, enhancing competitiveness, and lowering the cost of domestic and international financing.
The ministry emphasized that sovereign sukuk would be used as a tool to provide additional fiscal space, which can be used to increase spending on social protection programs, enabling support for priority groups and individuals with limited incomes. This would also strengthen allocations for education and health and improve the quality of public services provided to citizens.
The ministry justified this step as a means of ensuring a broader distribution of investment returns across different social segments, noting that the allocated land would remain state-owned, developed, and invested in a way that brings long-term economic and social benefits.
In a related context, economic and political expert Zahdi El-Shami expressed strong criticism towards the decision, considering that the state is clearly relying more on asset sales as a temporary solution to the growing debt crisis.
El-Shami said in his interview with Zawia3: “It’s clear and doesn’t require much explanation. The state is heading down the path of large debts it can no longer repay on time, and the solution it resorts to is giving up state-owned lands to Gulf investors, as happened in Ras El-Hikma, and as the state has previously discussed regarding the special economic zone of the Suez Canal.”
He explained that the state is moving in this direction under different names, whether it’s a sale or usufruct rights, but the result is the same: Egypt’s land is being allocated to foreign partners. This will not be beneficial as long as the wrong economic policies persist, without a real resolution to the crises or a review of the existing approach.
El-Shami continued that the state directly links land sales to debt repayment, as the state is now indebted and unable to meet its obligations. These policies raise serious questions about national security threats, especially since the lands being allocated are often in strategic areas and go to investors from Gulf countries, particularly the UAE, which has become an economic competitor to Egypt. He pointed out that the presence of foreign investors in ports, for example, poses a direct threat to national security, particularly in light of the tense regional conditions and ongoing wars.
Political analyst and head of the Socialist Popular Alliance Party, Medhat El-Zahid, shares El-Shami’s critical view and strongly opposes what he described as the “privatization of sovereign resources” as a solution to the debt crisis, warning of the dangerous economic and political repercussions of this approach.
El-Zahid said in his interview with Zawia3: “In general, we oppose the privatization of the state’s sovereign resources and the solution of the debt crisis through the sale of public assets. This pattern traps the state in a debt trap, with no real productive capacities to enable repayment, leading to a cycle of new debt to pay off old debt, and in the end, we lose strategic national resources.”
He added, “Sovereign sukuk, although different in form, are essentially debt bonds. If the state fails to repay, these sukuk become a tool to seize the pledged lands. We’re not just talking about a financial crisis, but a direct threat to sovereignty over national resources.”
El-Zahid considered that the debts have not been used to develop the economy’s productive capacities but have been directed towards projects with no real productive return, such as the monorail and building bridges, further complicating the crisis without sustainable solutions, and threatening to turn the state into an entity that loses control over its resources and political will under the weight of debt.
Concerns Over Investors’ Influence on Political Decisions
In February 2024, the Egyptian government announced a major investment deal in the Ras Hekma area, describing it as the beginning of a series of large national projects within the framework of Egypt’s “2052” integrated urban development plan. In official statements at the time, the Prime Minister explained that the northern coast would be a key area for absorbing the population increase by establishing integrated urban communities, not just summer resorts. He referred to cities such as Ras Hekma, Al-Negila, Sidi Barani, and Gergoub as future growth centers.
However, this plan faced wide criticism due to the lack of transparency regarding the nature of the investment contracts, the land allocation mechanisms, and the feasibility of the projects for Egyptian citizens, as well as the use of state-owned land as one of the solutions to quickly obtain foreign currency liquidity.
Commenting on the recent presidential decree regarding the Red Sea lands, Akram Ismail, a member of the central committee of the “Bread and Freedom” party (under formation) and a leader in the Civilian Movement, sees a clear similarity between the two deals, especially regarding the lack of details and basic information.
Ismail said in a statement to Zawia3: “The official news published in the Official Gazette is vague and lacks sufficient details, but it is likely that the land will be allocated through usufruct contracts for large sums in favor of investors, possibly in the tourism sector, just like the Ras Hekma deal. This step may help temporarily alleviate the financial crisis, but it is not a permanent solution.”
Ismail warned that this policy leads to the depletion of national resources and reproduces the financial crisis whenever temporary returns run out, without making any changes to the economic structure. He pointed out that contracting under the “usufruct” model, while alleviating concerns about direct sales, does not solve the underlying issue related to the lack of transparency about the investors, contract terms, and asset management.
The civil movement leader added: “We don’t know who the investors are, what their nationalities are, and whether they will likely be from the Gulf, particularly the UAE. What are the contractual terms governing the relationship? In general, every large investment grants political influence to the owning state, inevitably affecting the decision-making equation domestically.”
Ismail concluded his remarks by calling for the establishment of an alternative economic model that achieves sustainable dollar income, relying on productive capacity and competitiveness, rather than depending on the sale or lease of public assets as temporary solutions to structural crises.
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Sukuk Mechanism and Its Economic Feasibility
In this context, Mohamed Ramadan, an economic researcher at the Egyptian Initiative for Personal Rights, believes that the published decree does not provide details about the planned project. However, it is likely that the primary goal is to pave the way for issuing sovereign sukuk (the sukuk process), as these sukuk ultimately represent obligations for the state. Therefore, it remains unclear how they could contribute to reducing public debt while being used as a borrowing tool.
Ramadan continued in his interview with Zawia3, stating that the key question here is: Will the sukuk be issued based on usufruct rights to the asset, or based on the sale of the asset itself? This is something that cannot be determined yet and will become clearer with the actual sukuk issuance process.
What seems clear, according to Ramadan, is that the aim of this step is to attract Gulf investors interested in investing in Egyptian debt instruments, but who prefer Sharia-compliant instruments, such as Islamic sukuk, rather than traditional bonds.
However, Ramadan emphasized that it cannot be concluded that this represents a sale of the land, especially since sukuk issuance in Egypt is often done through usufruct rights rather than the sale of the asset itself. What is puzzling, though, is that the published decree in the official gazette did not include any details about the land’s location or the nature of the project to be established on it, whether it will be tourist or service-related.
From a methodological standpoint, the economic researcher views diversifying debt instruments as a theoretically sound idea, but he stresses the need to think within the actual current financial context. Egypt is burdened with high debt and a significant fiscal constraint, limiting the state’s ability to spend and invest without recurring borrowing or reliance on hot money.
He pointed out that shifting to instruments like Islamic sukuk may temporarily ease the crisis but does not address the core issue of the imbalance between dollar revenues and expenditures, especially with the decline in Suez Canal revenues and other effects on foreign currency sources.
Last April, Finance Minister Ahmed Kojak announced that Egypt plans to issue sovereign sukuk worth $2 billion in 2025, as part of the government’s plans to diversify financing sources and attract Sharia-compliant foreign investments.
This comes at a time when the public finance crisis is escalating, with the budget deficit for the fiscal year 2025-2026 expected to reach 1.5 trillion EGP (equivalent to $30 billion), excluding debt installments, which exceed this amount. Public debt service consumes more than 70% of total revenues, according to Ministry of Finance data, and represents nearly 47.4% of total government spending.
