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EU to provide ‘urgent’ $1bn short-term aid to Egypt

A woman buys cooking oil at a market in downtown Cairo, Egypt Reuters/Mohamed Abd El Ghany
A woman buys cooking oil at a market in downtown Cairo, Egypt

The European Union (EU) will provide €1 billion ($1.1 billion) in urgent short-term financial aid to support Egypt’s economy.

The funding is part of the larger €5 billion macro-financial assistance package. 

The remaining €4 billion will be released as longer-term assistance over 2024-2027 but is yet to be cleared by the 27-member bloc.

The aid will help address Egypt’s deteriorating macro-fiscal situation and financing needs in recent months, following the latest developments in the Gaza Strip, the Red Sea and Ukraine.

The aid will be provided through loans made available in one installment. 

However, a precondition includes Egypt continuing to make “concrete and credible steps towards respecting effective democratic mechanisms (including a multi-party parliamentary system), the rule of law and guaranteeing respect for human rights”.

In March, the EU agreed to a €7.4 billion funding package and upgraded its relationship with Egypt.

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

In a joint declaration with Egypt, the EU said it is ready to provide timely support to the Egyptian economy as it faces heightened balance-of-payment pressures from the global economic environment.  

“This support would usefully complement the International Monetary Financing (IMF) financing and will support Egypt in implementing economic policies aimed at highlighting credibility, boosting confidence, and unlocking private inflow.”

In addition, the EU and Egypt will boost cooperation in multiple fields, including renewable energy and renewable hydrogen, advanced industrialisation, agriculture, food security, connectivity and digitalisation, water security and water management. 

“These areas will attract up to €5 billion European investments supported by guarantees under the European Fund for Sustainable Development and Economic Investment Plan,” the declaration said.

Egypt last month secured an expanded $8 billion loan from the IMF after agreeing to implement a set of reforms and policies.

The North African nation has agreed on a deal with the UAE sovereign wealth fund ADQ worth $35 billion in investment and debt relief.

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