Macrofinancial assistance to Egypt

KEY POINTS

Financing and disbursement

The European Commission borrows the necessary funds on capital markets or from financial institutions under the EU Financial Regulation and lends them to Egypt. The assistance comprises two operations.

• A short-term operation under Decision (EU) 2024/1144 – adopted under the urgency procedure (Article 213 of the Treaty on the Functioning of the European Union (TFEU)) – grants up to €1 billion to meet immediate 2024 financing needs. The loan was available for nine months after the entry into force of its MOU and was disbursed in December 2024 as a single instalment.
• A medium-term operation under Decision (EU) 2025/1267 – adopted under the ordinary legislative procedure (Article 212 TFEU) – makes up to €4 billion available for 2.5 years from the entry into force of its MOU. It is disbursed in instalments, and, as a general rule, there must be a minimum interval of three months between the first and second instalments, and between the second and third. Each instalment can also be split into tranches. Both loans have a maximum duration of 35 years, and the medium-term operation may include a grace period before repayments begin.

Conditions for assistance

To receive EU support, Egypt must make concrete and credible steps towards:

• respecting effective democratic mechanisms, including a multiparty parliamentary system;
• upholding the rule of law;
• guaranteeing respect for human rights.

Disbursements also require:

• a satisfactory track record under an on-track, non-precautionary IMF credit arrangement;
• compliance with the economic and financial conditions set out in the MOUs.

These conditions include measures on fiscal consolidation, sound public finance management (ensuring transparency and accountability) and structural reforms, such as better governance of state‑owned enterprises, reciprocal market opening, fair and rules‑based trade, good governance and other agreed policy measures supporting sustainable and inclusive growth.

Implementation and checks

The Commission directly manages the MFA under the EU Financial Regulation and ensures that the agreed conditions are met. In particular, it:

• monitors, with the European External Action Service (EEAS), the political preconditions (democracy, rule of law and human rights) throughout the assistance period;
• disburses the funds to the Central Bank of Egypt, which may transfer them to the Ministry of Finance as the final beneficiary, following confirmation of residual financing needs under the MOU;
• may reduce, suspend or cancel the assistance if the conditions are not met or if Egypt’s financing needs fall significantly relative to initial projections;
• assesses Egypt’s financial and administrative control systems before implementation;
• applies anti‑fraud and audit rules, with oversight by the European Anti-Fraud Office (OLAF), the European Court of Auditors (ECA) and the European Public Prosecutor’s Office (EPPO), each acting within its mandate.

Monitoring and reporting

• Annual reporting. By 30 June each year, the Commission reports to the European Parliament and the Council of the European Union on the implementation of each decision, on Egypt’s economic situation and on reform progress. For the medium-term operation (Decision (EU) 2025/1267), the report also covers concrete steps taken towards democratic governance, the rule of law and human rights.
• Ex post evaluation. Within two years of the end of each operation, the Commission evaluates the results, efficiency and contribution of the assistance.