Europe to loan $1bn to Egypt to meet part funding needs

The European Commission has agreed to disburse €1 billion ($1.04 billion) in loans to Egypt to cover part of its financing needs for 2024/2025.

The loan will be released after Cairo fulfils the policy conditions agreed with the European Union (EU) under the ongoing macro-financial assistance.

The funding will also support macroeconomic stability and support its home-grown reform agenda in conjunction with the ongoing International Monetary Fund (IMF) programme.

Egypt’s economy has started to recover earlier in the year following the announcement of IMF and EU support after experiencing significant balance of payments pressure.

While the recovery continues, the economy remains affected by the effects of the Russia’s invasion of Ukraine and the situation in the Middle East, the European Commission said in a statement.

The instalment, the first and only one, comes after the commission concluded that Egypt has strengthened macro-economic resilience by unifying its fragmented exchange rate, improving its public financial management and scaling up its social safety programme.

The macro-financial assistance and the second operation of €4 billion currently under discussion form a fundamental part of the EU-Egypt strategic and comprehensive partnership.    

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Egypt looks set to save up to $190 million a year following changes the International Monetary Fund has made to the charges paid by debtors, an expert told AGBI in October.

Egypt’s fiscal budget for 2023-24 is projected at around EGP3 trillion (approximately $97 billion), with a significant portion allocated to servicing debt, which is one of the largest expenditures for the government.

In March, Cairo said it would receive an expanded $8 billion loan from the IMF after agreeing to implement a set of reforms and policies.