The European Union and Egypt have finalized a significant financial package worth €7.4 billion ($8 billion) and the signing ceremony was held in Cairo on Sunday. The deal aims to provide crucial support to Egypt, alleviate its debt burden, enhance energy trade with Europe, and address irregular migration flows.
European Commission President Ursula von der Leyen, along with leaders from Austria, Belgium, Cyprus, Greece, and Italy, convened in Cairo for the signing ceremony with Egyptian President Abdel Fattah El-Sissi.
Key components of the agreement include substantial credit allocations over the next few years to assist Egypt with its debt challenges. Additionally, there is a focus on bolstering energy exports to Europe, which could reduce dependency on Russian gas, as stated by a senior European Commission official.
The financial assistance encompasses both grants and loans spanning a three-year period. The majority of the funds, €5 billion, are allocated for macro-financial assistance, according to information from the EU mission in Egypt.
This agreement signifies an elevation of Egypt-EU cooperation to a strategic and comprehensive partnership, fostering collaboration across various economic and non-economic domains.
Egypt’s government will receive support from the EU to reinforce its borders, particularly with Libya, a significant transit point for migrants escaping poverty and conflicts in Africa and the Middle East. Furthermore, assistance will be provided to accommodate Sudanese refugees fleeing conflict within their own country.
The timing of this deal is critical, given the potential influx of individuals into Egypt’s Sinai Peninsula due to the ongoing Israel-Hamas conflict. The agreement is expected to inject much-needed funds into the Egyptian economy, which has faced challenges stemming from government austerity measures, the COVID-19 pandemic, the repercussions of Russia’s invasion of Ukraine, and the recent conflict in Gaza.
Earlier this month, Egypt also secured a deal with the International Monetary Fund (IMF) to increase a bailout loan to $8 billion, up from $3 billion. This agreement with the IMF was accompanied by economic reforms, including the flotation of the Egyptian pound and a significant increase in the main interest rate.