Brussels: Europe and the Arabs
During today's plenary session of the European Parliament, which is holding its sessions this week in Strasbourg, a majority of members of the European Union's highest legislative body voted in favor of the final reading of the decision to grant Egypt a second tranche of financial support worth €4 billion. This follows negotiations and deliberations that lasted for more than nine months in the International Trade, Foreign Affairs, and Budget committees. This confirms the existence of European consensus on supporting the Egyptian economy and widespread appreciation for Egypt's role in strengthening the pillars of stability and peace in the EU's southern neighborhood, according to the Embassy of the Arab Republic of Egypt in Brussels.
Last May, the European Union institutions in Brussels announced in a statement that the Council and the European Parliament had reached an agreement on the decision to grant Egypt €4 billion in total financial assistance.
Alongside the International Monetary Fund program for the period 2024-2027, this assistance will help Egypt bridge part of its external financing gap. The EU loan will be disbursed in tranches, with each disbursement linked to satisfactory progress in implementing the IMF program and a number of additional policy measures to be agreed upon between the European Commission and the Egyptian authorities.
The Council and the European Parliament agreed that the Commission will prepare an annual report on progress made in implementing the economic policy and financial terms of the Memorandum of Understanding, and on the steps taken by Egypt towards respecting democratic mechanisms, the rule of law, and ensuring human rights.
In addition, the text includes reporting requirements for the Commission, which will be tasked with providing regular reports on developments related to the EU's macro-financial assistance.
Following a request from Egypt in March 2024, the Commission proposed a macro-financial assistance operation for Egypt totaling €5 billion in concessional loans. The multilateral financing mechanism is divided into two parts, €1 billion and €4 billion, respectively. The first €1 billion loan to Egypt, approved in April 2024, aimed to cover part of its financing needs for the 2024/25 fiscal year and ensure macroeconomic stability. The second €4 billion multilateral financial assistance loan, approved today by the Council and the European Parliament, will address Egypt's deteriorating macroeconomic situation and financing needs and is expected to cover Egypt's financing gap between July 2025 and June 2027. The loan will be granted on terms that enable Egypt to repay the loan over a long period, including a possible grace period.
These two operations are part of the comprehensive strategic partnership signed with Egypt on March 17, 2024, during the visit of the President of the European Commission and five other European leaders.