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  • Monday, 02 December 2024

During the Plenary Session of the Parliament Attended by Minister of Planning, Economic Development and International Cooperation The House of Representatives Approves €1 Billion MoU between Egypt and EU on Macroeconomic and Budget Support Mechanism

Dr. Rania Al-Mashat: The Macroeconomic Support Mechanism is part of a broader partnership with the EU to enhance joint investments in priority areas.


The House of Representatives, in its plenary session today, approved Presidential Decree No. 400 of 2024 regarding the Memorandum of Understanding on the Macroeconomic and Budget Support Mechanism between Egypt and the European Union,  amounting to €1 billion. This is in light of elevating the relations between the two sides to the level of strategic partnership and the financial package announced during the meeting between H.E. President Abdel Fattah El-Sisi, President of the Republic of Egypt and Ursula von der Leyen, President of the European Commission, in Cairo last March.


The session was attended by H.E. Dr. Rania A. Al-Mashat, Minister of Planning, Economic Development and International Cooperation.


H.E. Dr. Rania Al-Mashat emphasized in her statement that the relationship between the Arab Republic of Egypt and the European Union is characterized by its diversity and strength over decades of joint and constructive cooperation to advance development efforts and achieve Egypt's priorities in various sectors. 

H.E. Dr. Al-Mashat explained that the Egypt-EU summit held last March between H.E. President Abdel Fattah El-Sisi and the President of the European Commission, in the presence of a number of heads of European government, was an affirmation of the strength of this partnership and the EU's keenness to support the Egyptian economy, particularly in light of the surrounding regional challenges.



The Egypt-EU Summit


H.E. Minister Al-Mashat explained that the Egypt-EU summit represents a turning point in the relationship between the two sides, as it witnessed the announcement of elevating relations to the level of strategic partnership. 

According to this announcement, a financial package worth 7.4 billion euros was agreed upon to enhance European investments in Egypt, support the Egyptian economy, and expand the scope of cooperation within the framework of national priorities; enhancing economic stability to ensure a stable and attractive economic environment for investment, encouraging investment and trade to strengthen bilateral economic relations, developing immigration and mobility frameworks to ensure organized and beneficial exchange of expertise and human resources, and expanding efforts to develop human capital.


H.E Dr. Al-Mashat pointed out that the Ministry, in line with its role to enhance economic relations with the EU, is continuously working with all partners to implement the agreements made within the financial package. This includes activating investment guarantee mechanisms to increase European investments in Egypt, implementing the Macroeconomic Support Mechanism and Budget Support, as well as providing technical support and capacity-building.


Structural Reforms to Stimulate the Private Sector


The Minister of Planning and Economic Development added that the  Macroeconomic Support Mechanism and Budget Support represents a key pillar of cooperation with the EU, in light of the country’s direction to implement structural reforms that stimulate the private sector and address challenges facing the Egyptian economy. This mechanism provides long-term, concessional financing to support the budget and enhance the state's ability to move forward with reforms.


H.E. Dr. Al-Mashat also pointed out that the ministry has been holding intensive meetings with various relevant parties and hosting repeated European Union missions to review the matrix of structural reforms implemented within the framework of Egypt’s National Structural Reform Programme. This program aims to achieve macroeconomic stability, resilience, enhance competitiveness, improve business environment, and stimulate green transformation.


H.E. Minister Al-Mashat explained that, over a period of 6 months and in coordination with concerned entities (such as the Central Bank, Ministries of Finance, Social Solidarity, Labor, Investment and Foreign Trade, Electricity and Renewable Energy, along with the Competition Protection and Anti-Monopoly Authority, and the Information Support and Decision-Making Center of the Cabinet), the government has implemented several reforms under the 3 pillars of the Structural Reform Program. These include electronic payroll tax calculations, the activation of the unified public finance law to set an annual cap on public debt, and enhancing sustainable transition through expanding social protection networks. A decree was also issued by the Cabinet to require all government entities to submit tax exemptions granted to state-owned companies, to prepare an initial draft of exemptions to be eliminated. In addition, a unified database managed by a dedicated unit to monitor and track state-owned companies, including details of ownership, was established.

The reforms also included preparing a plan for the public e-procurement system in line with the current public procurement law. Regarding the green transition, the government adopted a revised strategy for sustainable energy by September 2024 and issued regulations for issuing energy certificates to support the framework for private sector companies.


H.E. Dr. Rania Al-Mashat reaffirmed that structural reforms implemented are part of a clear state vision to enhance the economy’s competitiveness, increase private sector participation, adopt investment-friendly policies and programs, and simplify legislative and regulatory frameworks to create a business environment that attracts both domestic and foreign investments. She noted that these reforms complement other measures related to governance of investment spending and organizing the state's participation in economic activities, ultimately leading to economic growth and development driven by the private sector.


Al-Mashat highlighted the vital role of development partners in enhancing these reforms by providing budget support financing, whether through the European Union, the World Bank Group, the African Development Bank, and other partners.


The Egypt-EU Investment Conference


During the Egyptian-EU Investment Conference, which was held last June, H.E. Dr. Rania Al-Mashat signed with Mr. Valdis Dombrovskis, Executive Vice President of the European Commission, the first phase of the Macroeconomic and Budget Support Mechanism (MFA), worth one billion euros, which is the first phase of funding amounting €5 billion financing to be provided until 2027.


The Minister of Planning and Economic Development confirmed that the Macroeconomic Support Mechanism and Budget Support is part of a broader partnership with the European Union in the commercial, investment, and economic fields. Within this framework, the government is working to attract European investments in renewable energy, green hydrogen, and food security.


H.E. Minister Al-Mashat pointed to the report issued by the Ministry earlier this year to review the partnership with Team Europe, primarily involving European financial institutions such as the European Investment Bank and the European Bank for Reconstruction and Development, noting that the government is moving forward in its partnership with various European partners to expand development efforts and strengthen the partnership in climate action, particularly through the implementation of the country platform "NWFE" program.