The European Union (EU) has approved €1 billion in urgent short-term macro-financial assistance to Egypt, aiming to stabilize the country’s economy, a statement showed on April 12.
This aid package aims to address Egypt’s deteriorating macro-fiscal situation and financing needs, which have been worsened by recent events such as the Gaza war, Houthi attacks in the Red Sea, and the repercussions of Russia’s war in Ukraine.
€1 billion aid package
The €1 billion assistance is part of a larger proposed package that includes an additional €4 billion from 2024 to 2027. This overall macro-financial assistance complements a revised support program with the International Monetary Fund (IMF), which could provide up to €8 billion, contingent upon meeting certain conditions.
The IMF has expanded its loan deal with Egypt from $3 billion to $8 billion and has completed the first and second reviews of the program. Consequently, Egypt will receive $1.3 billion for each tranche under the loan. Reviews will continue every six months from the fourth review until the program’s conclusion in 2026.
In March, the EU pledged a total of €5 billion in loans and grants to support the Egyptian economy through 2027. This approach aims to disburse the initial aid before the end of 2024 to address Egypt’s urgent financing needs. The EU’s assistance will be provided in the form of loans disbursed in a single installment. A prerequisite for receiving this aid is that Egypt continues to take concrete and credible steps towards maintaining effective democratic mechanisms, including a multi-party parliamentary system, upholding the rule of law, and safeguarding human rights, according to the statement.
The decision regarding the macro-financial assistance will take effect upon its publication in the Official Journal of the EU.
According to the Financial Regulation, the loans will be allocated in the EU budget at a rate of 9% (€90 million) under the Neighbourhood, Development and International Cooperation Instrument – Global Europe (NDICI – Global Europe), added the statement.
Other agreements
In April, the Egyptian government approved the EU’s proposal to host a joint investment conference scheduled for June 29-30, with Egyptian President Abdel-Fattah El-Sisi and European Commission President Ursula von der Leyen expected to attend.
A month earlier, Egypt and the EU announced the elevation of their relationship to a strategic and comprehensive partnership amid heightened tensions in the Middle East. As part of this partnership, the EU committed a €7.4 billion financial and investment support package for Egypt for 2024-2027, including €600 million in grants, with €200 million dedicated to migration management. Additionally, the package comprises €5 billion in concessional loans (macro-financial assistance) and €1.8 billion in additional investments under the Southern Neighborhood Economic and Investment Plan.
