Egypt is set to receive four billion euros in financial support from the European Union following the approval of the European Parliament last week.
This is the second tranche of a financial assistance package agreed upon between Egypt and the EU in March 2024 as part of the Strategic Partnership Agreement between the two parties. The first tranche, worth one billion euros, was disbursed by the end of 2024.
As part of the agreement, the EU will provide Egypt with 1.8 billion euros of additional investment and 600 million euros in grants to be disbursed by 2027. This amounts to a total of 7.4 billion euros.
Alaa Ezz, president of the Confederation of Euro-Mediterranean Business Associations, noted that the four billion euros package falls within the framework of Egypt’s structural reform programme, built upon three primary pillars: preserving macroeconomic stability, fostering a conducive investment climate, and accelerating the green transition.
According to a Foreign Ministry statement, the 7.4 billion euro package allocates five billion euros to support the budget, 1.8 billion euros for investment guarantees to encourage European companies to invest in Egypt, and 600 million euros for technical assistance, capacity building, and training programmes.
The European Commission earlier stated that the financial assistance would help Egypt address part of its financing requirements for the current fiscal year, support macroeconomic stabilisation, and facilitate the implementation of its reform agenda in parallel with the ongoing International Monetary Fund (IMF) programme.
The package is being disbursed in three tranches, each contingent upon “satisfactory progress” in the execution of the IMF-backed reform programme, as well as the fulfilment of additional policy measures agreed upon by the European Commission and the Egyptian government in a memorandum of understanding.
“As Europe promotes peace and stability in the Middle East, today [the European Parliament] voted for critical financial assistance to Egypt and Jordan,” tweeted European Parliament President Roberta Metsola on X.
Egypt is implementing green projects, supporting the budget, and spending the tranches in line with the conditions set forth by the IMF for Egypt’s economic reform programme, including the phasing out of petroleum subsidies and eliminating parallel currency markets, Ezz said.
Egypt enjoys a unique competitive advantage in global trade with the US, particularly under the Qualified Industrial Zones (QIZ) Agreement, which grants Egyptian exports duty-free access to the US market, he added.
With many countries, including China and the East Asian countries, now facing tariffs exceeding 30 per cent when exporting to the US, the 10 per cent tariffs imposed on Egyptian exports represent a strategic opportunity to attract investments in industries targeting US markets, Ezz noted.
Mohamed Hassan, managing director of Alpha Financial Investments Management noted that the incoming EU funds will support the Egyptian pound, even if short-term fluctuations persist amid continued withdrawals from treasury bills.
He projected that the foreign exchange market would regain stability once immediate responses to the US tariff measures have settled. Even though the EU funds earmark financial assistance for specific projects, Hassan said that the resulting investments would enhance domestic production and strengthen Egypt’s foreign currency reserves.
Earlier this week, the Egyptian pound depreciated against the US dollar, falling by two per cent to LE51.5.
* A version of this article appears in print in the 10 April, 2025 edition of Al-Ahram Weekly
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