EU's conditional aid pledge to Egypt

Egypt President Mohamed Morsi meets with European Commission President Jose Manuel Barroso. The EU will offer the Egyptian government €500 million in macro financial aid. Photo by: Etienne Ansotte / European Union

The European Union has said it is ready to offer the Egyptian government €500 million ($646 million) in macro financial aid — but only after the agreement Egypt is negotiating with the International Monetary Fund materializes.

European Commission President Jose Manuel Barroso made the announcement Thursday (Sept. 13) at a joint conference with Egyptian President Mohammed Morsi in Brussels. Morsi was in the region to, among other things, “win” economic aid pledges, according to Reuters. The country urgently needs financial support to rebuild its “shattered economy.”

“There’s a threat of a real economic collapse in Egypt,” Project on Middle East Democracy Executive Director Stephen McInerney told Devex in August.

This year, the European Union will be disbursing €130 million of the €449 million it has made available to Egypt for 2011-2013. The money will cover projects for job creation, youth employment, and technical and vocational training, Barroso said in the same event.

Barroso also said the bloc is “ready to consider” €150 million to €200 million in budget support to be used for an agreed economic recovery plan. But this, too, depends on Egypt closing a deal with theIMF.

Barroso’s conditional pledge underscores the importance of theIMFdeal for Egypt, which an EU official has said would need more than $10 billion to get its economy back on track. AnIMFdeal could encourage donors to eventually consider providing aid to the Arab nation.

An IMF mission is again expected to arrive in Egypt by the end of September to discuss the $4.8 billion loan the country has requested from the financial institution, Reuters reports.

Find EU projects and tenders in Egypt, and see which organizations are working in the country. Read more development aid news online, and subscribe to The Development Newswire to receive top international development headlines from the world’s leading donors, news sources and opinion leaders — emailed to you FREE every business day.

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  • Ravelo jennylei

    Jenny Lei Ravelo

    Jenny Lei Ravelo is a Devex Senior Reporter based in Manila. She covers global health, with a particular focus on the World Health Organization, and other development and humanitarian aid trends in Asia Pacific. Prior to Devex, she wrote for ABS-CBN, one of the largest broadcasting networks in the Philippines, and was a copy editor for various international scientific journals. She received her journalism degree from the University of Santo Tomas.