Egypt-EU €1B agreement 'part of €5B total financing' until 2027: Al-Mashat

CAIRO - 29 June 2024: Minister of International Cooperation, Rania Al-Mashat, emphasized the substantial and pivotal development in Egyptian-European relations reflecting the close historical ties between both sides and a commitment to enhancing development based on shared priorities and interests.

 

This follows the signing of the first tranche of Macro-Financial Assistance (MFA) to support the overall economy and budget deficit, totaling €1 billion, by Rania Al-Mashat, Minister of International Cooperation, and  Valdis Dombrovskis, Executive Vice-President of the European Commission, during the Egyptian-EU Investment Conference. 

 

Al-Mashat further explained that the Macro-Financial Assistance (MFA), totaling €5 billion, responds to the significant evolution in Egyptian-European relations under President Abdel Fattah El-Sisi, aligning with commitments announced during the Egyptian-European Summit last March, totaling €7.4 billion. The summit included a political declaration to elevate bilateral relations to a strategic partnership level.

 

The Minister highlighted that the first tranche of €1 billion will be disbursed in the second half of 2024, out of the €5 billion allocated by the European Union within the mechanism. The remaining tranches, totaling €4 billion, are scheduled for disbursement from 2025 to 2027, featuring favorable financing terms with long repayment periods and concessional interest rates.

 

Minister Al-Mashat noted that this concessional financing significantly lowers costs compared to international market rates, thereby bolstering the government's fiscal space to stabilize the overall economy and indirectly reducing the cost of credit for the private sector.

 

She emphasized that the government is implementing a matrix of structural reforms, policies, and measures under the Macro-Financial Assistance mechanism to achieve three objectives: enhancing the competitiveness of the Egyptian economy, improving the business environment, supporting economic resilience and stability, and promoting green transformation. These measures aim to enhance fiscal efficiency, support safety nets and social protection, increase transparency levels, facilitate the formalization of the informal sector, and create a conducive environment for local and foreign investments.

 

The Ministry of International Cooperation hosted a high-level European Union delegation from April 28 to May 1, and conducted several virtual meetings to coordinate with 13 relevant national entities to finalize procedures related to the MFA mechanism.

 

Participating national entities included the Central Bank, Ministries of Finance, Social Solidarity, Trade and Industry, Electricity and Renewable Energy, Planning and Economic Development, General Authority for Investment and Free Zones, Competition Protection Agency, and the Information Support and Decision Support Center of the Cabinet, aimed at concluding negotiations and outlining the matrix of national policies and measures to be implemented within the framework of securing the first tranche of financing.