Egypt, EU hold an investment conference to help Cairo battle inflation and foreign currency crisis
In this photo provided by Egypt's Presidency Media Office, Egyptian President Abdel-Fattah el-Sissi, greets President of the European Commission, Ursula von der Leyen, before the opening of the EU-Egypt Investment Conference in Cairo, Egypt, Saturday, June 29, 2024. The two-day conference is part of the Egypt-EU strategic partnership which both parties signed earlier this year aiming at injecting investment in Egypt economy. Credit: AP
CAIRO — Egypt and the European Union on Saturday opened a two-day investment conference to advance the implementation of their strategic partnership agreement that includes a 7.4 billion-euro ($8 billion) aid package for the cash-strapped Middle Eastern nation.
The March aid package includes both grants and loans over the next three years for the Arab world’s most populous country. Most of the funds — 5 billion euros ($5.4 billion) — are macro-financial assistance to help Egypt shore up its economy, which is hit by a staggering shortage of foreign currency and soaring inflation.
In his opening remarks, President Abdel Fattah el-Sissi said the conference “sends a powerful message of confidence and support from the European Union for the Egyptian economy and the economic reform measures implemented over the past 10 years.”
The EU, represented by Executive Vice-President Valdis Dombrovskis, and Egypt will sign a memorandum of understanding for the short-term macro-financial assistance of up to €1 billion ($1.07 billion) to support Egypt’s economic reform program, the EU mission in Cairo said in a statement.
Other investment deals worth 40 billion euros ($42.8 billion) are scheduled to be signed with European companies as well as bilateral cooperation agreements with the EU to advance employment and skills, vaccines manufacturing, food security and sustainable development, it said.
“In just 100 days, we have already brought new energy into our partnership. And this is just the beginning,” European Commission President Ursula von der Leyen, who attended the conference, said. “We are backing our new partnership with substantial public investments. But what truly makes a difference is that the private sector is also on board.”
El-Sissi’ government embarked on a massive reform program in 2016 in return for loans from the International Monetary Fund. The reform has centered on floating the local currency, substantial cuts in state subsidies on basic goods, reducing public investment and allowing the private sector to become the engine of growth.
In this photo provided by Egypt's Presidency Media Office, Egyptian President Abdel-Fattah el-Sissi, and President of the European Commission, Ursula von der Leyen, pose for a photo, during the opening of the EU-Egypt Investment Conference in Cairo, Egypt, Saturday, June 29, 2024. The two-day conference is part of the Egypt-EU strategic partnership which both parties signed earlier this year aiming at injecting investment in Egypt economy. Credit: AP
Most recently, the government once again floated the pound and sharply increased the main interest rate in March. Commercial banks are now trading the U.S. currency at more than 47 pounds, up from about 31 pounds.
The measures are meant to combat ballooning inflation and attract foreign investment. They were also needed to meet IMF demands in order to increase its bailout loan from $3 billion to $8 billion.
The currency devaluation and subsidies cuts have inflicted further pain on Egyptians already struggling with skyrocketing prices over the past years. Nearly 30% of Egyptians live in poverty, according to official figures.
The EU deal, which has drawn criticism from rights groups over Egypt’s human rights record, came as concerns grow that economic pressure on Egypt and conflicts in neighboring countries could drive more migrants to European shores.
In this photo provided by Egypt's presidency media office, Egyptian President Abdel-Fattah el-Sissi, greets President of the European Commission, Ursula von der Leyen, during the opening of the EU-Egypt Investment Conference in Cairo, Egypt, Saturday, June 29, 2024. The two-day conference is part of the Egypt-EU strategic partnership which both parties signed earlier this year aiming at injecting investment in Egypt economy. Credit: AP
Over a dozen rights groups, including Human Rights Watch and Amnesty International, urged the EU in a letter earlier this month to ensure that its bailout package "secures concrete, measurable, structural, and timebound human rights progress and reforms in the country.”
Egyptian authorities have carried out a relentless crackdown on dissent for a decade, and rights groups have repeatedly called for Western governments to link improving rights conditions to financial assistance.