Cairo: Egypt has successfully secured its second tranche of pound 1 billion from the European Union, part of a larger pound 7.4 billion financing package aimed at bolstering the country's economic infrastructure.
According to State Information Service Egypt, this tranche will aid in alleviating short-term financing pressures, extending debt maturities, and expanding fiscal space for human development initiatives in line with Egypt's economic reform programme. Planning Minister Rania Al-Mashat confirmed the release followed the execution of 16 economic and structural measures mandated by the EU.
The measures are a testament to Egypt's commitment to securing external financing necessary for macroeconomic stability and its ambition to establish a more robust and sustainable economic framework. Ursula von der Leyen, President of the European Commission, highlighted the allocation's role in supporting Egypt's economic stability, democracy, sustainability, and adherence to the rule of law.
EU Ambassador to Egypt, Angelina Eichhorst, stressed that the tranche signifies Egypt's dedication to key economic and political reforms, fostering further growth and development. Eichhorst expressed satisfaction with the dynamic EU-Egypt partnership that has yielded concrete results.
The comprehensive reform efforts by Egypt include improving public financial management, optimizing foreign exchange market operations, and advancing green transitioning in water and energy sectors. The country is also enhancing its business environment and competitiveness through streamlined industrial land allocation and online licensing processes.
The pound 7.4 billion package is part of the EU's Macro-Financial Assistance and Budget Support Mechanism, encompassing pound 5 billion in concessional loans for macro-financial support, pound 1.8 billion for investment financing under the Southern Neighbourhood Economic Investment Plan, and pound 600 million in grants, with a portion dedicated to migration-related initiatives.
Aligned with International Monetary Fund standards, the financial assistance aims to bolster Egypt's economy. The IMF has observed improvements in the balance of payments due to strong remittances, tourism receipts, and growth in non-oil exports. Nonetheless, the IMF advises expedited reforms to facilitate private sector-led growth. Egypt has revised its GDP growth target to 7.5 percent by 2030, with private sector contributions expected to reach 72 percent of GDP.
Egypt's recent agreements with the IMF include a staff-level consensus on the Extended Fund Facility programme reviews and the Resilience and Sustainability Facility's inaugural review, awaiting the IMF Executive Board's approval to release approximately $2.5 billion.
The pound 1 billion tranche is also tied to accords established during the Egypt-EU Summit in October 2025, which included a new pound 4 billion deal to support Egypt's economy. The Strategic and Comprehensive Partnership signed in March 2024 between Egypt and the EU encompasses political cooperation, economic stability, trade, investment, migration, security, and skills development.