Egypt secures €1b EU assistance to drive economic reforms

Egypt’s Parliament has approved a €1 billion macro-financial assistance (MFA) agreement with the European Union, a vital step to bolster the country’s macroeconomic stability and reform agenda.

The agreement, ratified on Monday following Presidential Decree No. 400 of 2024, underscores the deepening partnership between Egypt and the EU, which was reinforced during President Abdel Fattah El-Sisi’s meeting with European Commission President Ursula von der Leyen in Cairo earlier this year.

Rania Al-Mashat, Egypt’s Minister of Planning, Economic Development, and International Cooperation, described the agreement as pivotal for advancing critical structural reforms and addressing Egypt’s economic challenges. “This financing will support Egypt’s budget, sustain the reform momentum, and enhance the country’s economic resilience,” she stated, adding that the reforms are key to attracting private investments and fostering long-term growth.

Signed on July 24, 2024, the MFA agreement marks the first phase of a broader €5 billion assistance package scheduled for disbursement by 2027. It aligns with Egypt’s efforts to attract European investments, particularly in renewable energy, green hydrogen, and food security. Minister Al-Mashat highlighted the government’s commitment to reforms such as streamlining the tax system and expanding social protection networks to ensure a sustainable future.

Over the past six months, Egypt has achieved significant milestones in structural reform. These include introducing electronic payroll tax processing, activating the Unified Public Finance Law to control public debt, and updating its sustainable energy strategy, set for completion by September 2024. “We are making strides toward a green transformation while strengthening our fiscal framework,” Al-Mashat emphasized.

As part of transparency and efficiency efforts, Egypt is also developing a unified database for state-owned enterprises to improve tax management and cut bureaucratic hurdles. The funding from this agreement, the minister noted, is a cornerstone for maintaining reform momentum and ensuring Egypt’s economic resilience in the face of global challenges.