Egypt receives one billion euros from the European Union to support the budget

Egypt's Ministry of Planning, Economic Development and International Cooperation announced today (Thursday) that the government has successfully disbursed €1 billion in concessional development financing from the European Union. This funding represents the first tranche of the second phase of the "Macroeconomic and Budgetary Support Instrument," reflecting growing international confidence in Cairo's economic reform program.

Details of the financing package and signed agreements

This funding is an integral part of the financial package signed last October during the first Egyptian-European Summit held in Brussels. This summit resulted in a memorandum of understanding for the second phase of the support mechanism, which aims to alleviate financial pressures and support the Egyptian state budget in the face of global and regional economic challenges.

Large-scale structural reforms

Commenting on the event, Dr. Rania Al-Mashat, Minister of Planning, Economic Development, and International Cooperation, stated, “The first phase of the second stage is linked to 16 structural reforms that Egypt has already implemented as part of the National Structural Reform Program.” The Minister noted that these reforms were carried out in full coordination with relevant stakeholders, most notably the Central Bank of Egypt, and the Ministries of Finance, Planning, Investment and Foreign Trade, Electricity and Renewable Energy, Water Resources and Irrigation, Environment, and Industry.

The importance of reforms and their economic impact

This step is particularly important in the current economic context, as these reforms contribute to strengthening macroeconomic stability across several axes:

• Improving public finances: through developing medium-term budget frameworks and managing financial risks and public investment more efficiently.
• Supporting the private sector: Enhancing competitiveness and the business environment by improving mechanisms for allocating industrial land and facilitating investment licensing procedures, thereby attracting more foreign direct investment.
• Green transformation: Driving sustainable development by promoting sound water resource management, developing waste-to-energy policies, improving energy efficiency, and protecting the natural capital of the Red Sea.

The strategic context of the Egyptian-European partnership

These financial flows come within the framework of upgrading relations between Egypt and the European Union to the level of a “comprehensive strategic partnership” announced in March 2024, which includes a huge financing package of 7.4 billion euros to support the Egyptian economy until 2027. This partnership aims to enhance stability in the region, combat illegal immigration, and support the digital and energy transformation in Egypt, making Cairo a pivotal partner for Europe in the southern Mediterranean.

Status of implementation of the national program

The minister explained that with the disbursement of this tranche, 38 reforms have now been implemented within the National Structural Reform Program under the strategic partnership with the European Union. This achievement is divided into 22 measures implemented during the first phase, for which €1 billion was disbursed last January, in addition to 16 measures within the current tranche, thus paving the way for the completion of the remaining agreed-upon funding tranches in the future.