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European Commission provides €1 bn in macro-financial assistance to Egypt
The European Commission has adopted a decision to disburse €1 billion in loans to Egypt following the fulfillment of the policy conditions agreed with the EU under the ongoing Macro-Financial Assistance (MFA). This disbursement, which corresponds to the first and only installment, will take place in the coming days.
This financial support will help Egypt cover part of its financing needs for the fiscal year 2024/2025 and ensure macroeconomic stability, while supporting its home-grown reform agenda in conjunction with the ongoing International Monetary Fund (IMF) program. Egypt’s economy started to recover earlier in the year following the announcement of IMF and EU support, after experiencing significant balance of payments pressure. While the recovery is continuing, the economy remains affected by the economic effects of Russia’s war of aggression against Ukraine and the situation in the Middle East.
This installment comes after the Commission concluded that Egypt has taken measures to strengthen macro-economic resilience by unifying its fragmented exchange rate and improving its public financial management, while scaling up its social safety program. Progress has been made in the business and investment environment, through increased transparency on investment and import conditions, and strengthening the role of the competition authority. Advancements have also been achieved in promoting the green transition by adopting the updated Egyptian Sustainable Energy Strategy until 2040 and advancing private sector participation in renewable energy production.
This MFA, along with the second operation of €4 billion that is currently under discussion with co-legislators, forms a fundamental part of the EU-Egypt Strategic and Comprehensive Partnership. It comes in response to multiple economic challenges over the last years, exacerbated by the complex geopolitical situation in the Middle East, where Egypt is a key pillar of stability and a strategic partner of the EU.
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