Egypt secures €1 billion from EU to strengthen economy, advance reforms

The European Commission has approved a decision to release €1 billion in loans to Egypt, following the fulfilment of the policy conditions agreed with the EU under the current Macro-Financial Assistance (MFA) programme.

This disbursement, which represents the first and only instalment, will be made in the coming days, Caliber.Az reports per foreign media.

The tranche is provided after the commission concluded that Egypt has strengthened its macroeconomic stability through the unification of the national currency exchange rate, improved management of public finances, and the expansion of the social protection programme.

This financial aid will help Egypt meet part of its financing requirements for the 2024/2025 fiscal year and support macroeconomic stability, while also advancing its domestic reform agenda alongside the ongoing International Monetary Fund (IMF) programme.

Egypt's economy began to show signs of recovery earlier this year following the announcement of IMF and EU support, after facing considerable balance of payments pressure. While the recovery is ongoing, the economy continues to be affected by the economic consequences of Russia's invasion of Ukraine and the wider situation in the Middle East.

The disbursement follows the Commission's assessment that Egypt has implemented measures to strengthen its macroeconomic resilience, including unifying its previously fragmented exchange rate and improving public financial management, alongside expanding its social safety programme.

Progress has also been made in improving the business and investment climate, with increased transparency on investment and import conditions, as well as bolstering the role of the competition authority. Further steps have been taken towards promoting the green transition, including the adoption of the updated Egyptian Sustainable Energy Strategy through to 2040 and advancing private sector involvement in renewable energy production.

This MFA, along with a second operation worth €4 billion currently under negotiation with co-legislators, is a key component of the EU-Egypt Strategic and Comprehensive Partnership. It is a response to various economic challenges faced in recent years, aggravated by the complex geopolitical situation in the Middle East, where Egypt plays a crucial role as a pillar of stability and a strategic partner of the EU.

By Aghakazim Guliyev