EUR 7.4 bn in EU funding: The EU will provide Egypt with a EUR 7.4 bn package of loans, grants, and investments through to 2027, after President Abdel Fattah El Sisi signed a joint strategic and comprehensive partnership with European Commission President Ursula von der Leyen at the Ittihadiya Palace — who was accompanied by the prime ministers of Greece, Italy, Belgium, the chancellor of Austria, and the president of Cyprus — yesterday evening (watch, runtime: 1:03:10).

A paradigm shift: The European officials’ visit to Cairo represents a “very important milestone in the relations between Egypt and the EU,” El Sisi said during a joint presser held after the agreement was signed. The agreement elevates the relationship between the two sides “to the level of a strategic and comprehensive partnership, based on the values of equity and on mutual respect and trust,” according to the joint declaration.

The breakdown of the funding:

  • EUR 5 bn in concessional loans to provide macro-financial assistance, according to a statement (pdf) by the bloc;
  • EUR 1.8 bn of “additional” investments under the Southern Neighborhood Economic and Investment Plan;
  • EUR 600 mn in grants,including EUR 200 mn for migration management.

Almost at USD 20 bn: Finance Minister Mohamed Maait had previously said that thecountry could receive a total of USD 20 bn in foreign support. Our expanded USD 8 bn IMF program and EU package puts us at USD 16.1 bn. Maait said we’re in line for USD 3 bn from the World Bank, a USD 1-1.2 bn from the IMF’s Resilience and Sustainability Facility, in addition to funding from Japan and the UK. This follows the ADQ’s USD 35 bn agreement for the development of Ras El Hekma.

IMF funds disbursed soon? The IMF executive board has yet to put Egypt on its public calendar, which extends through 27 March. We expect the board to meet by month’s end provided the staff-level agreement on our assistant package gets circulated in time to give the board two weeks’ notice of what they will be voting on.

It remains unclear how much of EUR 7.4 bn will be “fresh funds:” Despite the large headline figure touted by the agreement, the breakdown of the funding remains unclear, with some of it being financing that had been deployed some years back. The EUR 35 mn to develop our renewable energy capacities under the government’s Nexus for Food, Water, and Energy initiative (NWFE) listed in the statement accompanying the agreement was originally announced back in 2022, as was the EUR 100 mn from the Food and Resilience and Facility.

The partnership follows six pillars of mutual interest, including political relations, economic stability, investment and trade, migration and mobility, security, and education and research cooperation, von der Leyen said during the presser.

#1- Political relations: Egypt and the bloc of European nations will continue to strengthen political dialogue and “promote democracy, fundamental freedoms, and human rights, gender equality, and equal opportunities.” The presidents of the European Commision and European Council will now meet the president of Egypt every two years for an EU-Egypt summit in addition to yearly meetings of the Association Council.

#2- Economic stability: The agreement entails that the bloc will support the country’s “long-term macro-economic stability and sustainable economic growth” and work towards unlocking private sector inflows. The EU also expressed its willingness to provide financing for “short-term stabilization needs and medium-term economic development needs” under the agreement, and added that debt swaps — to be decided by EU member states — could “enhance the fiscal space needed for essential investment.”

#3- Investment and trade: Green hydrogen, industrial projects, water security, digitization, agriculture, and other areas are expected to bring in up to EUR 5 bn of Egypt-bound investment from Europe guaranteed by the European Fund for Sustainable Development and Economic Investment Plan. Towards this end, the bloc will support an EU-Egypt Investment Conference later this year to encourage private sector inflows into Egypt from Europe.

Renewables cooperation seems to have really caught the interest of the EU: “Egypt has all the resources to become a renewables hub, in particular when it comes to renewable hydrogen,” von der Leyen said. The bloc signaled its intention to invest in our green hydrogen ambitions and projects like GREGY — one of Egypt’s planned electricity linkups with Greece — to enable exports of Egyptian renewable energy into Europe.

#4- Migration and mobility: Financial support should be coming our way to “assist Egypt on migration-related programs,” in tandem with efforts to tackle irregular migration through work programs and other legal pathways. As mentioned by many of the European heads of state at the presser, the bloc recognises the importance of and will continue to support Egypt in hosting the refugees.

#5- Security and law enforcement: The two sides agreed to deepen cooperation to tackle terrorism, cybersecurity threats, and organized crime.

#6- Education and research cooperation: Providing support to develop technical and vocational education and training to develop the country’s workforce was pointed to as the most important pillar of cooperation by von der Leyen during the presser. Egypt is also now eligible to apply to some of the EU’s initiatives to further research and education cooperation with European universities.

Criticism of Israel’s war on Gaza also united the leaders: El Sisi and his European counterparts roundly opposed Israel’s potential ground invasion of Rafah, rejected the forceful displacement of Palestinains, and called for more aid to be let into the enclave that is on the verge of famine.“Current events confirm once again, the vital role that Egypt plays in the security and stability of the region,” von der Leyen said.

More cooperation incoming? El Sisi held one-on-ones with each of the leaders to discuss economic and investment cooperation and the ongoing war in Gaza, an Ittihadiya statement said.

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