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Egypt's parliament has approved Saudi Arabia's controversial loan to Cairo, to help fund the development of the Sinai Peninsula, local media reported.

Called "King Salman's programme for the development of the Sinai Peninsula", the agreement was signed by Saudi and Egyptian officials in Riyadh last March, just one month before Egypt gave Saudi Arabia sovereignty over two islands in the Red Sea.

Under the investment agreement, Saudi Arabia will loan Egypt $1.5 billion to help develop Sinai and buy Saudi oil products needed for development purposes.

"As much as half-a-billion dollars from the total loan amount will be allocated to developing Sinai in the form of building King Salman's University in al-Tor city, funding a series of agricultural and irrigation projects, and upgrading north Sinai's network of roads," read the proposal.

This was prepared by the Egyptian parliament's legislative and constitutional affairs committee.

The remaining $1 billion will be allocated to buy Saudi oil products, the committee added.

"As long as the King Salman Sinai development programme agreement does not affect any of Egypt's sovereign rights, it will not be put to a public referendum and will only need parliament's approval to go into effect."

Parliament Speaker Ali Abdel Al confirmed that the agreement did not affect Egypt's sovereign rights, so there will be no public referendum on the issue.

The proposal, he added, will be referred to the committees of economic affairs and legislative and constitutional affairs for further discussion. The two committees are preparing a report on the loan agreement to be reviewed and voted on by parliament in a plenary session.

The agreement comes less than two months after Egypt handed control of two Red Sea islands to Saudi Arabia, sparking outrage among Egyptians, during King Salman's visit to Cairo.

The government argued that Tiran and Sanafir had always belonged to Saudi Arabia and that Egypt had merely administered them while on lease since the 1950s.

Critics accused Egyptian President Abdel Fattah al-Sisi of "selling" the islands in return for Saudi investments.

More than 150 people have been sentenced to prison in connection with demonstrations on April 25 against the deal.

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