EU agrees $8bn funding package with Egypt

via Reuters

• EU funding Egypt with €7.4 billion
• Developing strategic partnership
• Focus on irregular migration

The European Union has agreed a €7.4 billion ($8 billion) funding package and upgraded its relationship with Egypt after a meeting in Cairo on Sunday between the European Commission president, Ursula von der Leyen, and Egypt’s president, Abdel Fattah al-Sisi.

The deal consists of €5 billion in concessional loans, €1.8 billion of investments and €600 million in grants over the next three years.

Under the agreement, Egypt’s relationship with the EU will rise to a “strategic and comprehensive partnership”, which is designed to boost co-operation in areas such as renewable energy, trade and security, with an emphasis on irregular migration. 

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Included in the grants made available to Egypt is €200 million earmarked for migration.

Also present at the meeting in Cairo on Sunday were the Italian, Greek, Austrian and Belgian prime ministers, and the president of Cyprus. European diplomats have expressed increased concern over Egypt’s stability after the outbreak of the Israel-Hamas conflict.

Egypt is in the midst of an economic crisis, with inflation higher than 35 percent, and it is dealing with the fallout from conflicts in Gaza and Sudan. Its international partners have doubled down on their support in recent weeks.

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• Egypt’s inflation rate makes record jump in February

The deal is part of a wave of funding from Egypt’s international partners and multilateral lenders that the country’s finance minister, Mohamed Maait, has said is worth $20 billion. 

It comes after the agreement on March 6 of an $8 billion International Monetary Fund package that was announced hours after the Egyptian pound was allowed to depreciate 37 percent against the dollar.

Earlier this month, Egypt also agreed a deal with the UAE sovereign wealth fund ADQ worth $35 billion in investment and debt relief.

Reuters cited a “senior EU official” as saying most of the EU funding is newly allocated and was drawn up in close cooperation with the IMF, with €1 billion of the loan to be delivered this year and the remaining €4 billion subject to approval by the European parliament.

The deal coincides with an increase in “irregular” migration across the Mediterranean. 

An unnamed EU official told Politico that the deal should “fund investment so we can create more economic activity in Egypt, so that the younger generation stays there” and help Egypt cope with “a huge migration crisis with Sudanese, Syrian and Palestinian refugees arriving en masse”.