European Council and Parliament Announce Preliminary Agreement on €4 Billion Financial Aid Package for Egypt

On Monday, the European Council and the European Parliament announced a preliminary agreement to provide Egypt with a total financial aid package worth €4 billion (approximately $4.32 billion) in support of its efforts to achieve economic stability and address financial challenges.

In a statement, the European Union clarified that this assistance aims to help cover part of Egypt’s external financing gap, in parallel with the International Monetary Fund (IMF) program running from 2024 to 2027.

The statement added that the EU loan will be disbursed in installments, with each tranche subject to a "satisfactory" assessment of progress in implementing the IMF program, as well as a set of political and economic reforms and measures agreed upon between the European Commission and Egyptian authorities.

The EU also noted that the European Commission will prepare an annual report evaluating progress on economic and financial conditions, as well as Egypt’s adherence to democratic standards, the rule of law, and human rights. Periodic updates on the financial assistance will also be provided.

The statement emphasized that the agreement remains preliminary and requires formal approval from the European Council and Parliament before it can enter into force.

Background on the Financial Assistance

In March 2024, Egypt formally requested a comprehensive financial assistance package from the EU. The European Commission then proposed providing concessional loans totaling €5 billion (around $5.4billion),withaninitial\text{€}1billion(approximately$1.08 billion) loan approved in April 2024 to cover part of Egypt’s financing needs for the 2024/2025 fiscal year.

The second loan, worth €4 billion (about $4.32 billion) and agreed upon today, aims to support Egypt’s financial and economic stability and cover the expected financing gap between July 2025 and June 2027. It includes favorable repayment terms, potentially with grace periods.

This assistance falls under the strategic and comprehensive partnership signed between the EU and Egypt on March 17, 2024, during an official visit to Cairo by European Commission President Ursula von der Leyen, accompanied by five other European leaders.