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We’re in for a big package from the EU: The EU and Egyptian officials are expected to ink an agreement that would unlock EUR bns of funding on Sunday when a delegation of EU officials — including European Commission President Ursula von der Leyen and the Greek, Belgian, and Italian prime ministers — visits Cairo.
How much are we talking? The number varies depending on who’s talking. Finance Minister Mohamed Maait earlier this week said that the country is in line for USD 5-6 bn (EUR 4.6-5.5 bn) in financing from the EU. The Financial Times says we’re in line for an EUR 7.4 bn package that will come in a mix of grants and loans and aims to prop up the country’s economy and manage migration to the EU. We think the range is more likely to be EUR 5-5.5 bn.
It’s unclear how the package will be structured. How much will be in the form of investment guarantees versus fresh investment, or direct support to the government. The more that flows through the private sector, the better, we say: Institutions such as the EBRD and EIB are doing particularly well identifying private-sector champions and asset managers who can put funding to work here in a way that adds value to businesses and the economy.
Where’s the money going? The energy sector and boosting trade in the Suez Canal Economic Zone are priority areas for funding, Bloomberg reports. The package includes assistance aimed at helping the country manage the growing number of Sudanese refugees as well as to regulate the Egypt-Libya border, an unnamed EU official told the FT.
The timeline: The package — due through to the end of 2027 — includes EUR 1 bn in emergency financial assistance that could be provided upon the signing of the agreement and EUR 4 bn in macro-financial support, which will be contingent on reforms under the country’s expanded IMF program and would require the approval of EU member states, the Financial Times reports. The remainder would come from multiple EU sources.
Not all fresh funds: The agreement could repackage existing EU support programs, one EU official told the salmon-colored paper.
The package is “strategically important,” according to an EU official who spoke to the FT. “We’re worried about two borders — the Sudan-Egypt border, where Sudanese are entering the country, and the Egypt-Libya border, where people are exiting,” they said.
Egypt is seen as a critical ally: The country plays a “very critical, key role” in curbing irregular migration to Europe, Greek Migration Minister Dimitris Kairidis said. “We do not have direct flows out of Egypt [but] there are Egyptians crossing through eastern Libya.”
More cooperation ahead? The two parties are also working to finalize a joint declaration aimed at addressing issues related to migration, economic stability, security, and water.
ICYMI- Egypt is in line for more funding: The country could receive a total of USD 20 bn in foreign support, including our expanded USD 8 bn IMF program, an anticipated USD 3 bn from the World Bank, as well as additional funding from Japan, the UK, and the IMF’s Resilience and Sustainability Facility.
