Proposal for a COUNCIL DECISION on providing short-term macro-financial assistance to the Arab Republic of Egypt
Date: 2024-03-15
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EU aid, EU loan, Egypt, European Neighbourhood and Partnership Instrument, European neighbourhood policy, economic reform, economic stabilisation, financial aid, macro-financial assistance, structural adjustment

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   EUROPEAN COMMISSION  Brussels, 15.3.2024  COM(2024) 460 final 2024/0072 (NLE)  Proposal for a COUNCIL DECISION on providing short-term macro-financial assistance to the Arab Republic of Egypt {SWD(2024) 461 final}  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

The European Union (‘EU’) and Egypt have agreed to deepen their relationship and develop a 
strategic and comprehensive partnership for shared prosperity, stability and security, based on 
joint  interest  and  mutual  trust  and  building  on  the  already  existing  positive  agenda  in  EU-
Egypt  relations.  The  Strategic  and  Comprehensive  Partnership  will  cover  specific  areas  of 
cooperation,  as outlined in  the Joint Declaration, clustered across six  pillars of intervention, 
namely: political relations; economic stability; investment and trade; migration; security and 
law  enforcement  cooperation;  demography  and  human  capital.  The  implementation  of 
cooperation in these areas will unleash the full potential of the EU-Egypt relationship. 

Underpinning the partnership will be a financial package consisting of short- and longer-term 
support  for  the  necessary  macro-fiscal  and  socio-economic  reform  agenda,  as  well  as 
increased  amounts  available  to  support  investments  in  Egypt  and  targeted  support  for  the 
implementation of the different strategic priorities. 

This  financial  package  will  be  provided  in  a  challenging  economic  situation  where  Egypt 
continues to have sizeable and unmet financing needs. In this context, the Egyptian authorities 
requested  support  through  macro-financial  assistance  (‘MFA’)  from  the  EU  on  12  March 
2024  after  an  International  Monetary  Fund  (‘IMF’)  staff  level  agreement  on  an  augmented 
Extended Fund Facility of USD 8 billion was announced on 6 March 2024.  

After showing some resilience during the pandemic, partly thanks to reforms in the context of 
successive  IMF  programmes  since  2016,  Egypt’s  macro-fiscal  situation  has  deteriorated 
noticeably  over  recent  months.  Over  the  past  two  years,  external  pressures  have  intensified 
and  Egypt’s  debt  has  increased  further,  also  reflecting  a  more  sluggish  implementation  of 
reforms  agreed  on  in  the  October  2022  Staff-Level  Agreement  with  the  IMF.  The 
repercussions of Russia’s war on Ukraine and the Hamas terrorist attacks across Israel on 7 
October 2023 have led to protracted capital outflows and lower services exports, notably from 
tourism and Suez Canal proceeds. This is particularly challenging amid Egypt’s difficult fiscal 
situation with growing public debt and persistent deficits, as well as a chronic current account 
deficit.  The  major  rating  agencies  downgraded  Egypt  ratings  since  April  2023,  eventually 
assigning  below-investment  grades  to  the  country’s sovereign  debt after  the outbreak of the 
Gaza  war.  Egypt  continues  to  face  very  significant  challenges,  including  high  inflation,  the 
state’s entrenched economic footprint, inefficiencies in the foreign exchange market, and the 
spillovers from the conflict in Gaza, which further weakened Egypt’s economic stability and 
put  pressure  on  the  country’s  external  and  fiscal  position  while  increasing  the  country’s 
overall vulnerability to external shocks. 

Against the backdrop of the deteriorating regional stability and Egypt’s important role in the 
region, the conclusion of a staff-level  agreement on a new IMF programme  and after an in-
depth  assessment  of  economic  situation  in  Egypt  and  in  the  context  of  the  Strategic  and 
Comprehensive Partnership between Egypt and the EU, the Commission is submitting to the 
Council a proposal to provide a new short-term MFA of up to EUR 1 billion to the benefit of 
Egypt, as part of an overall MFA package of up to EUR 5 billion in loans.  

The proposed MFA would help Egypt cover part of its overall external financing gap, which 
is estimated at around USD 17.7 billion in the context of the new IMF programme over the 
period of 2024-2027. Financing needs are particularly acute in the second half of 2024, with a 
substantial  overall  financing  gap  estimated  by  the  IMF  at  USD  9.3  billion  in  the  upcoming 

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fiscal  year  (FY,  July-June)  2024/25.  This  makes  it  imperative  to  make  sure  that  a  first 
significant  contribution  via  MFA  could  already  be  provided  by  the  end  of  this  year.  This 
appears impossible if the decision was adopted in accordance with Article 212 of the Treaty 
on the Functioning of the European Union (‘TFEU’) under the ordinary legislative procedure, 
taking  into  account  the  constraints  imposed  by  the  upcoming  end  of  the  Parliament's 
legislative period in conjunction with the time still needed thereafter to fully enact the MFA, 
including  for  agreeing  on  a  set  of  policy  reforms  to  underpin  the  assistance.  It  is  therefore 
justified to exceptionally use Article 213 TFEU providing for the adoption of the decision by 
the Council only for the present first part of the MFA package.  

The disbursement would take place in one instalment, strictly linked to satisfactory progress 
with  the  implementation  of  both  the  IMF  programme  and  in  relation  to  a  number  of  policy 
measures to be agreed between the Commission and the Egyptian authorities and listed in a 
Memorandum  of  Understanding  (‘MoU’).  The  MoU  could,  in  principle,  include  reforms  to 
promote  the  role  of  the  private  sector  in  the  economy,  monetary  and  exchange  rate  policy 
reforms,  continued  Public  Finance  Management  (PFM)  reforms  and  social  support 
mechanism enhancements.  

As  further  elaborated  in  the  Commission  Staff  Working  Document  accompanying  this 
proposal,  the  Commission  considers,  based  also  on  the  assessment  of  the  political  situation 
made  by  the  European  External  Action  Service,  that  the  economic  preconditions  for  the 
proposed MFA operation are satisfied, while progress in relation to the political pre-condition 
will be monitored continuously so as to ascertain that compliance with the criteria moves in a 
satisfactory direction. 

• 

General context  

Growth slowed down on the back of both domestic and external factors. Following a strong 
post-pandemic recovery of 6.7% during FY21/22, real GDP growth eased to 3.8% in FY22/23 
and  continued  to  ease  to  2.6%  year  on  year  during  the  July-September  2023  quarter.  High 
inflation,  uncertainty  surrounding  the  exchange  rate  and  sluggish  reform  implementation 
weighed on consumption and investment. The previously strong services exports have come 
under pressure as the conflict in Gaza dampens tourism and the Houthi attacks in the Red Sea 
brought down Suez Canal proceeds. Non-oil private sector activity, gauged by the Purchasing 
Managers’  Index,  remained  contractionary  in  January  2024  as  order  books  weakened  and 
output declined. Business expectations deteriorated under ailing client demand. By December 
2023, unemployment receded slightly to 6.9%.  

Inflation  has  remained  high,  amid  a  volatile  parallel  exchange  rate,  which  diverged 
substantially  from  the  virtually  stable  official  exchange  rate  throughout  most  of  2023  and 
early 2024. Consumer price inflation stood at 29.8% year on year in January 2024, following 
an annual average of 33.8% in 2023. Importantly, food price increases moderated somewhat 
but were still high at 47.9% in January, where corresponding spending accounts for roughly 
one  third  of  the  consumer  basket.  Already  before  the  current  crisis,  around  30%  of  the 
population  was  in  poverty,  thereby  particularly  affected  by  the  higher  food  price  inflation. 
While  official  reserves  inched  up  slightly  to  USD  35.3  billion  or  around  7½  months  of 
imports  in  January,  and  total  net  foreign  assets  of  the  financial  system  reached  a  negative 
position of USD 27.2 billion in December 2023, both are expected to improve on account of 
inflows from the USD 35 billion United Arab Emirates (UAE) investment announced on 23 
February 2024 and the new flexible exchange rate regime. As the official exchange rate was 
fixed at around 31 Egyptian pounds per US dollar since the last devaluation in February 2023 
until March 2024, foreign exchange shortfalls gave rise to an increasing parallel market with 
rates fluctuating between 50 and 70 EGP/USD. When the SLA with the IMF was signed on 6 

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March 2024, the authorities enacted a flexible currency regime and the EGP settled at around 
50  EGP/USD.  The  Central  Bank  of  Egypt  (CBE)  accompanied  the  move  to  a  flexible 
exchange rate with a sizeable interest rate hike of 600 bps in an attempt to curb inflation. 

The  public  finance  situation  remains  very  challenging.  The  fiscal  deficit  deteriorated  over 
spiralling  interest  payments  while  public  debt  remains  high.  The  overall  budget  deficit  had 
remained broadly stable in FY22/23 at around 6% of GDP. However, the first half of FY23/24 
(July-December 2023) has seen a 75.3% year-on-year increase in the deficit in nominal terms 
as  expenditure  growth  outpaced  revenue  growth,  notably  owed  to  a  doubling  in  interest 
payments  which  now  eat  up  as  much  as  97.8%  of  total  budget  revenues  during  the  same 
period. For FY23/24 as a whole, the IMF projects interest payments to reach 87.2% of total 
budget revenues. The overall budget deficit of 6.3% of GDP in FY23/24. Public debt stood at 
95.9% of GDP at end-FY22/23, up from 88.5% the FY before and the highest since 2017, and 
is projected to rise to 96.4% this FY.  

The current account improved but regional crises pose substantial risks. At the same time, the 
UAE investment deal will probably raise imports. Following a deficit of 3.5% in FY21/22, the 
current account deficit narrowed to 1.2% last FY and improved by another 12% year on year 
in nominal terms during the July-September quarter of 2023. While tourism and Suez Canal 
proceeds  provided  strong  support,  goods  exports  eased.  Remittances  declined  strongly  as 
Egyptians abroad avoided the overvalued official exchange rate. Strong import compression 
helped  keeping  the  overall  deficit  contained.  High-frequency  data  suggest  that  the  usually 
strong income earners tourism and Suez Canal proceeds have since been hit particularly hard 
by  the  conflict  in  Gaza  and  the  Red  Sea  attacks  and  corresponding  downside  risks  remain 
substantial.  The  unification  of  the  previously  fragmented  exchange  rate  system  is  likely  to 
help  lure  remittances  back  into  official  channels.  At  the  same  time,  implementing  the  UAE 
investment deal on the ground in early 2025 will probably push up imports.   

In  FY22/23,  Egypt  nearly  reached  its  goal  of  USD  10  billion  in  FDI  inflows,  up  by  12.3% 
over  FY21/22.  This  included  public  asset  sales  under  the  new  state  ownership  policy.  The 
UAE investment deal will provide a further boost to FDI, although it remains unclear whether 
the  state-directed  investment  by  the  Emirati  sovereign  fund  will  also  induce  market-driven 
investment  from  elsewhere.  Portfolio  investment  flows,  previously  a  significant  although 
volatile source of hard currency, have not yet returned to Egypt after the massive outflow that 
started when Russia’s war on Ukraine began, reflecting a key vulnerability for Egypt. The so 
far  existing  backlog  of  domestic  reforms,  including  the  long  overdue  exchange  rate 
unification and, most recently, uncertainty due to the war in Gaza are likely to have deterred 
capital  inflows  further.  Moody’s  lowered  Egypt’s  sovereign  credit  outlook  from  stable  to 
negative  in  mid-January  2024,  citing  the  risks  from  growing  interest  service,  the  exchange 
rate rebalancing and mounting external pressures. Earlier in October 2023, Moody’s, S&P and 
Fitch  all  downgraded  Egypt’s  sovereign  debt  to  below-investment  grade  due  to  record 
inflation, a chronic foreign currency shortage and the government’s growing public debt.  

• 

Consistency with existing policy provisions in the policy area 

None 

• 

Consistency with other Union policies 

The EU and Egypt have developed a close political and economic relationship over the years, 
formalised  through  the  conclusion  of  the  Association  Agreement,  which  entered  fully  into 
force in 2004. This relationship was recently given new impetus through the February 2021 
adoption of the Renewed partnership with  the Southern Neighbourhood ‘A new Agenda for 

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the Mediterranean’ and the subsequent adoption of the EU-Egypt Partnership priorities 2021-
2027) in June 2022 at the 9th Association Council. The partnership priorities set the political 
framework  until  2027  and  cover  three  broad  areas:  (i)  modernizing  Egypt’s  economy  in  a 
sustainable way (ii) strengthening cooperation on foreign policy issues (iii) ensuring stability 
through  cooperation  on  security  and  counterterrorism,  migration  and  promotion  of  human 
the  EU’s 
rights.  The  EU-Egypt  Multi-Annual  Indicative  Programme  (2021-2027), 
programming document for Egypt, is also based on the Partnership Priorities. 

Egypt's  economic  ties  with  the  EU  are  also  well  developed.  The  EU  remains  Egypt's  first 
trading partner in terms of both imports and exports and one of the biggest investors in Egypt. 
In 2022, Egypt reduced its trade deficit with the EU owing to stronger exports in particular of 
oil, gas and fertilisers. In line with the EU Trade Policy Review Communication of February 
2021,  the  EU  is  open  to  working  with  Egypt  on  modernising  bilateral  trade  and  investment 
relations,  including  by  ensuring  the  trade  and  competition  provisions  of  the  EU-Egypt 
Association  Agreement  are implemented in  full, in  a manner that enables it to  reach its full 
potential. 

Cooperation is  set to  deepen  further under the Strategic  and  Comprehensive Partnership for 
shared  prosperity,  stability  and  security  that  was  confirmed  at  the  tenth  meeting  of  the 
Association Council on 23 January 2024. It will cover specific areas of cooperation, including 
political 
freedoms, 
macroeconomic stability,  sustainable investment  and  trade, energy, water, food security and 
climate change, migration, security and human capital development.  

relations,  good  governance,  human 

fundamental 

rights  and 

Countries  that  are  covered  by  the  European  Neighbourhood  Policy  are  eligible  for  MFA  (if 
fulfilling different conditions). The EU MFA would complement the grants mobilised under 
the  Neighbourhood,  Development  and  International  Cooperation  Instrument  (‘NDICI-GE’) 
and  other  EU  programmes.  By  supporting  the  adoption,  by  the  Egyptian  authorities,  of  an 
appropriate  framework  for  macroeconomic  policy  and  structural  reforms,  the  EU’s  MFA 
would enhance the added value and effectiveness of the EU’s overall financial interventions, 
including through other financial instruments. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY  

Legal basis 

The  legal  basis  for  this  proposal  is  Article  213  of  the  Treaty  on  the  Functioning  of  the 
European Union (‘TFEU’). Egypt’s financing needs are particularly acute in the second half of 
2024,  in  view  of  the  substantial  overall  financing  gap  estimated  at  USD  9.3  billion  in  the 
upcoming fiscal year 2024/25, making it imperative to be able to disburse MFA support by the 
end of the year. Ensuring this is impossible if the decision was adopted by the Parliament and 
the  Council  in  accordance  with  Article  212  TFEU  under  the  ordinary  legislative  procedure, 
taking  into  account  the  constraints  imposed  by  the  upcoming  end  of  the  Parliament's 
legislative period in conjunction with the time still needed thereafter to fully enact the MFA, 
including  for  agreeing  on  a  set  of  policy  reforms  to  underpin  the  assistance.  It  is  therefore 
justified to use Article 213 TFEU providing for the adoption of the decision by the Council, 
without prejudice to future MFA operations.   

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• 

Subsidiarity (for non-exclusive competence)  

is  respected  as 

the  objectives  of  restoring  short-term 
The  subsidiarity  principle 
macroeconomic stability in Egypt cannot be sufficiently achieved by the Member States alone 
and  can  be  better  achieved  by  the  European  Union.  The  main  reasons  are  the  budgetary 
constraints faced at the national level and the need for strong donor coordination in order to 
maximise the scale and effectivenes of the assistance.  

• 

Proportionality 

The  proposal  complies  with  the  proportionality  principle:  it  confines  itself  to  the  minimum 
required in order to achieve the objectives of short-term macroeconomic stability and does not 
go beyond what is necessary for that purpose.  

As mentioned above, the proposed MFA operation in this decision would be the first part of 
an  MFA  support  package  of  overall  up  to  EUR  5  billion,  divided  into  the  present  MFA 
operation  of  up  to  EUR  1  billion,  and  a  second  regular  MFA  operation  of  up  to  EUR 
4 billion.1 As identified by the Commission based on the estimates of the IMF in the context 
of  the  Extended  Fund  Facility,  the  amount  of  the  proposed  two  new  MFA  operations 
corresponds  to  56.7%  of  the  estimated  residual  financing  gap  for  the  period  FY24/25-
FY26/27.  This  is  consistent  with  standard  practices  on  burden-sharing  for  MFA  operations 
(for a country with an Association Agreement, the upper limit would be 60% according to the 
Council conclusions of 8 October 2002), taking into account the assistance pledged to Egypt 
by other bilateral and multilateral donors.   

• 

Choice of the instrument 

Project  finance  or  technical  assistance  would  not  be  suitable  or  sufficient  to  address  the 
macroeconomic  objectives.  The  key  value  added  of  the  MFA  in  comparison  to  other  EU 
instruments would be to alleviate the external financial constraints and to help create a stable 
macroeconomic  framework,  including  by  promoting  a  sustainable  balance  of  payments  and 
budgetary  situation,  and  an  appropriate  framework  for  fostering  broad-based  structural 
reforms.  By  helping  to  put  in  place  an  appropriate  overall  policy  framework,  MFA  can 
increase  the  effectiveness  of  the  actions  financed  in  Egypt  under  other,  more  narrowly-
focused EU instruments.  

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Stakeholder consultations 

MFA is provided as an integral part of the international support for the economic stabilisation 
of  Egypt.  In  the  preparation  of  this  proposal  for  MFA,  the  Commission  services  have 
consulted  with  the  IMF  and  the  World  Bank,  which  have  already  put  in  place  sizeable 
financing programmes and are preparing new ones. The Commission consulted the Alternate 
Economic and Financial  Committee on 12 March 2024, where an endorsement for the draft 
proposal was provided. The Commission has also been in  regular contact with the Egyptian 
authorities. 

1 
the Arab Republic of Egypt - COM(2024) 461 

Proposal for a Decision of the European Parliament and of the Council on providing macro-financial assistance to 

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• 

Collection and use of expertise 

line  with 

the  requirements  of  Regulation  (EU,  Euratom)  2018/10462(‘Financial 
In 
Regulation’),  the  Commission  services  will  carry  out  in  time  for  the  implementation  of  the 
assistance  an  Operational  Assessment  (OA)  of  the  financial  and  administrative  circuits  of 
Egypt  in  order  to  ascertain  that  the  procedures  in  place  for  the  management  of  programme 
assistance, including MFA, provide adequate guarantees.   

• 

Impact assessment 

The  EU’s  macro-financial  assistance  is  an  exceptional  emergency  instrument  aimed  at 
addressing  severere  balance-of-payment  difficulties  in  third  countries.  Therefore,  this  MFA 
proposal is exempted from the requirement to carry out an Impact Assessment in accordance 
with  the  Commission's  Better  Regulation  Guidelines  (SWD(2015)  111  final)  as  there  is  a 
political imperative to move ahead quickly in a situation requiring a rapid response.  

More  generally,  the  Commission's  MFA  proposals  build  on  lessons  learned  from  ex-post 
evaluations  carried  out  on  past  operations  in  the  EU's  neighbourhood.  The  present  MFA 
operation,  and  the  economic  adjustment  and  reform  programme  attached  to  it,  will  help 
alleviate  Egypt's  short-term  financing  gap  while  supporting  policy  measures  aimed  at 
strengthening  medium-term  balance  of  payments  and  fiscal  sustainability  and  raising 
sustainable growth, thus complementing the augmented programme to be adopted by the IMF 
Executive  Board.  These  policy  conditions  should  address  some  of  the  fundamental 
weaknesses  shown  over  the  years  by  the  Egyptian  economy  and  economic  governance 
system.  Possible  areas  of  policy  reform  measures  could,  in  principle,  include  reforms  on 
private  sector  empowerment,  monetary  and  exchange  rate  policy  reforms,  continued  Public 
Finance Management (PFM) reforms and social support mechanism enhancement, laying the 
foundation  for  the  second  part  of  the  MFA  package  and  complementing  other  efforts 
supported under the Comprehensive and Strategic Partnership. 

• 

Fundamental rights 

Countries  that  are  covered  by  the  ENP  are  eligible  for  MFA.  A  pre-condition  for  granting 
MFA  is  related  to  respecting  effective  democratic  mechanisms,  including  a  multi-party 
parliamentary system and the rule of law, and guarantees respect for human rights, where in 
the  present  case  Egypt  should  continue  to  make  concrete  and  credible  steps  towards 
respecting these criteria.   

Human rights challenges in Egypt remain significant, particularly in relation to the protection 
of fundamental freedoms, governance and the rule of law. However, in the last few years, the 
political  leadership  in  Egypt  has  taken  several  steps  putting  greater  emphasis  on  the 
importance  of  the  respect  for  human  rights;  it  abolished  the  state  of  emergency  (apart  from 
areas in the Sinai), launched the first ever National Strategy for Human Rights, relaunched the 
Presidential Amnesty Committee, releasing over 1000 political prisoners and embarked on the 
National  Dialogue.  Further,  Egypt  has  intensified  its  engagement  on  human  rights  with  the 
EU,  allowing  for  the  first  time  the  visit  of  the  EUSR  for  Human  Rights  to  Cairo  in  2022. 
Egypt  has  also  recently  started  engaging  in  international  fora  and  it  is  cooperating  with  the 
UN OHCHR  in  an EU funded project  that aims  to establish an EU-UN  partnership, joining 
synergies  to  reinforce  a  culture  of  human  rights  in  Egypt.  Egypt  has  further  declared  in  its 
National  Strategy  for  Human  Rights  its  intention  to  reform  the  law  on  pre-trial  detention, 
ameliorate  detention  conditions,  limit  the  number  of  crimes  punished  by  death  and  enhance 

2 

OJ L 193, 30.7.2018, p. 1–222.  

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the  culture  of  human  rights  across  all  government  institutions.  Effective  implementation  is 
needed, progress having so far been made in the institutional track. 

In  light  of  the  above  it  can  be  assessed  that  Egypt  has  taken  some  relevant  steps  towards 
fulfilling  the  criteria.  At  the  same  time,  effective  progress  on  implementation  needs  to 
continue,  notably  in  the  framework  of  Egypt’s  own  National  Strategy  for  Human  Rights. 
Progress will be monitored continuously throughout the implementation of the MFA so as to 
ascertain that compliance with the criteria moves in a satisfactory direction. 

4. 

BUDGETARY IMPLICATIONS  

Being  the  first  part  of  an  MFA  package  of  overall  up  to  EUR  5  billion  in  loans,  the 
proposedMFA operation for Egypt of up to EUR 1 billion is foreseen to be disbursed in one 
instalment  to  be  released  in  the  second  half  of  2024.  Provisions  will  be  provided  under  the 
External  Action  Guarantee  at  a  provisioning  rate  of  9%  which  will  be  programmed  under 
NDICI-GE, for a total amount of EUR 90 million (budget line 14 02 01 70 “NDICI – Global 
Europe - Provisioning of the Common Provisioning Fund”). 

The loans shall be granted in the form of amortising loans with a grace period and subsequent 
capital  repayments  in  equal  tranches  over  a  longer  period.  Such  loan  structure  will  be 
beneficial  for  both  the  beneficiary,  in  that  it  facilitates  repayments,  and  the  budget,  by 
spreading contingent liabilities over a long time frame.   

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The  European  Union  shall  make  the  MFA  available  to  Egypt  for  a  total  amount  of  up  to 
EUR 1 billion, provided in the form of medium- to long-term loans, which will contribute to 
cover Egypt’s residual financing needs in 2024. The assistance is planned to be disbursed in 
one instalment, provided that the policy measures have been implemented in a timely manner 
and that other relevant pre-conditions remain fulfilled.  

The assistance will be managed by the Commission. Specific provisions on the prevention of 
fraud and other irregularities, consistent with the Financial Regulation, are applicable.  

The Commission and the Egyptian authorities will agree on a Memorandum of Understanding 
setting  out  the  structural  reform  measures  associated  with  the  proposed  MFA  operation, 
including aspects of timing and sequencing. Moreover, as is normally the case with MFA, the 
disbursements  would  inter  alia  be  conditional  on  satisfactory  reviews  under  the  IMF 
programme.  The  Commission  will  work  closely  with  the  Egyptian  authorities  to  monitor 
progress on the policy actions and the pre-conditions, as specified above.  

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2024/0072 (NLE) 

Proposal for a 

COUNCIL DECISION 

on providing short-term macro-financial assistance to the Arab Republic of Egypt 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 213 thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

3 

Egypt has experienced heightened external financing pressure amid escalated regional 
tensions. In this context, it is of utmost importance to ensure swift and timely financial 
assistance in view of Egypt’s particularly acute financing needs in the second half of 
2024.  In  order  to  allow  the  financial  assistance  to  reach  Egypt  still  in  2024,  the 
exceptional use of the urgency procedure under Article 213 TFEU is appropriate, also 
to  allow  the  Egyptian  authorities  sufficient  time  to  implement  the  accompanying 
reform measures which will need to be assessed by the European Commission before 
executing the disbursement.  

Relations between the European Union and the Arab Republic of Egypt (‘Egypt’) are 
developed  within  the  framework  of  the  EU-Egypt  Association  Agreement,  in  force 
since  2004.  The  EU  and  Egypt  adopted  the  latest  EU-Egypt  Partnership  Priorities 
(2021-2027)  at  the  ninth  EU-Egypt  Association  Council  on  19  June  2022.  The 
Partnership Priorities reconfirm the joint aim to address common challenges facing the 
EU  and  Egypt,  promote  joint  interests  and  guarantee  long-term  stability  and 
sustainable development on both sides of the Mediterranean. The shared commitment 
to  the  universal  values  of  democracy,  rule  of  law  and  respect  for  human  rights 
continues  to  underpin  the  Partnership  Priorities,  as  also  reflected  in  the  EU-Egypt 
Multi-Annual Indicative Programme for the period of 2021-2027.  

The  Partnership  Priorities  reflect  the  shared  commitment  of  the  EU  and  Egypt  to 
reinforce cooperation in support of Egypt’s ‘Sustainable Development Strategy Vision 
2030’  and  the  EU’s  determination  to  act  on  renewed  impetus  to  strengthen  the 
partnership  with  its  Southern  Neighbourhood.  Namely,  in  the  European  Council 
Conclusions of 10-11 December 20203, the EU  identified a democratic,  more stable, 
greener and more prosperous Southern Neighbourhood as a strategic priority. The EU 
Agenda for the Mediterranean and its Economic and Investment Plan for the Southern 
Neighbours set out in the EU Joint Communication on the Southern Neighbourhood of 
9  February  2021  present  the  EU’s  objectives  to  achieve  long-term,  sustainable 

Council  meeting, 

European 
https://www.consilium.europa.eu/en/press/press-releases/2020/12/11/european-council-conclusions-10-
11-december-2020/ 

December 

Brussels, 

EUCO 

10-11 

2022, 

22/10, 

EN 

8 

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(4) 

(5) 

(6) 

(7) 

(8) 

socioeconomic  recovery  and  resilience  and  to  advance  the  twin  green  and  digital 
transitions in the region.  

In  line  with  the  Partnership  Priorities,  the  EU  and  Egypt  are  committed  to  ensuring 
accountability, the rule of law, the full respect of human rights, fundamental freedoms, 
promoting democracy, gender equality and equal opportunities as constitutional rights 
of  all  their  citizens.  These  commitments  contribute  to  the  advancement  of  the 
partnership  and  to  Egypt’s  sustainable  development  and  stability.  The  increased  and 
constructive engagement between the EU and Egypt in the last period has opened the 
path to more meaningful dialogue on human rights related issues. The subcommittee 
on Political Matters, Human Rights and Democracy, International and Regional issues 
of  December  2022  and  the  Association  Committee  of  May  2023  provided  the 
institutional platforms to exchange on an array of human rights issues, which the EU 
would like to continue and build on. The improvement of the human rights situation in 
Egypt will also have a positive impact on EU-Egypt relations.  

Assistance to Egypt is funded mainly through the new Neighbourhood, Development 
and International Cooperation Instrument – Global Europe (NDICI-GE). The Union's 
indicative allocation for Egypt under the NDICI-GE for the first period (2021-2024) of 
the Multiannual Indicative Programme (MIP) is EUR 240 million. This is in addition 
to the ongoing cooperation portfolio of EUR 1.3 billion and other budget support and 
emergency  measures  in  response  to  the  pandemic  and  Russia’s  war  on  Ukraine 
amounting to EUR 307 million. The partnership priorities for 2021-2027 are set out in 
the  EU-Egypt  MIP,  which  has  been  prepared  in  close  consultation  with  all  relevant 
stakeholders, and cover three broad areas: i) Sustainable Modern Economy and Social 
Development;  ii)  Partnering  in  Foreign  Policy,  and  iii)  Enhancing  Stability.  The 
NDICI-GE instrument replaces the European Neighbourhood Instrument (ENI) under 
which the EU's bilateral assistance to Egypt for the period 2014  – 2020 amounted to 
EUR 756 million. 

The  EU  recognises  Egypt's  key  role  for  regional  security  and  stability.  Terrorism, 
organised crime and conflicts are common threats against our security and the social 
fabric of nations across both sides of the Mediterranean. Therefore, the EU and Egypt 
have  a  common  interest  in  strengthening  cooperation  highlighted  in  the  Partnership 
Priorities,  in  full  compliance  with  international  law,  including  human  rights  and 
international humanitarian law.  

Recalling  the  geo-political  challenges,  where  the  consequences  of  Hamas  terrorist 
attacks  across  Israel  on  7  October  2023  as  well  as  the  conflict  in  Sudan,  and  the 
strategic  importance  of  Egypt  as  the  largest  country  in  the  region  and  a  pillar  of 
stability for the whole Middle East, the Union is embarking on concluding a Strategic 
and Comprehensive partnership with Egypt as outlined in the Joint Declaration.  

The objective of the Strategic and Comprehensive Partnership with Egypt is to elevate 
the EU-Egypt political relations to a strategic partnership and enable Egypt to fulfil its 
key  role  of  providing  stability  in  the  region.  The  partnership  aims  to  contribute  to 
support  Egypt’s  macroeconomic  resilience  and  enable  the  implementation  of 
ambitious  socio-economic  reforms  in  a  manner  that  complements  and  reinforces  the 
reform process foreseen under the IMF programme for Egypt. As outlined in the Joint 
Declaration, the partnership will address a wide set of policy measures clustered across 
six  pillars  of  intervention,  namely:  political  relations;  economic  stability;  investment 
and  trade;  migration;  security  and  law  enforcement  cooperation;  demography  and 
human capital. 

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9 

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(9) 

Underpinning the partnership will be a financial package of EUR 7.4 billion consisting 
of short- and longer-term  support for the necessary macro-fiscal  and socio-economic 
reform agenda, as well as increased amounts available to support investments in Egypt 
and targeted support for the implementation of the different strategic priorities. Part of 
the  support  package  is  the  EU  MFA  package  of  up  to  EUR  5 billion  in  loans, 
composed  of  two  MFA  operations,  a  short-term  one  for  up  to  EUR  1  billion  and  a 
more  medium-term  one  for  up  to  EUR  4  billion,  financial  instruments,  such  as 
guarantees  and  blending  instruments,  aimed  at  mobilising  public  and  private 
investments with the objective of generating substantial new investments. This will be 
complemented  by  programmes  to  support  specific  priorities  under  the  Strategic  and 
Comprehensive  Partnership  through  individual  projects  and  technical  assistance 
implemented  under  the  Neighbourhood,  Development  and  International  Cooperation 
Instrument4. 

(10)  Egypt’s  macro-fiscal  situation  has  faced  significant  challenges  and  deteriorated 
substantially over recent months, as external pressures have intensified and public debt 
has  increased  further,  with  substantial  downside  risks  to  the  economic  outlook 
persisting.  The  repercussions  of  Russia’s  war  on  Ukraine  and  of  Hamas  terrorist 
attacks  against  Israel  have  led  to  protracted  capital  outflows  and  lower  foreign 
currency receipts, notably due to sharply falling income from tourism and Suez Canal 
proceeds. This is particularly challenging amid Egypt’s difficult fiscal situation, which 
is characterised by constant fiscal deficits and high and growing debt to GDP ratios. 

(11)  Egypt made considerable reform efforts during its engagement with the IMF in 2016-
2021. Reforms included a significant currency devaluation, accompanied by monetary 
policy  reforms  focused  on  an  inflation  target  corridor.  Fuel  subsidy  reform  was 
coupled  with  a  significant  strengthening  of  a  targeted  social  transfer  system.  Public 
finance management was strengthened by developing medium-term revenue and debt 
management strategies. The authorities also began improving the governance of state-
owned enterprises (SOEs).  

(12)  After the adoption of a follow-up IMF programme in December 2022, reform progress 
was  less noticeable, although Egypt  has implemented steps to  level  the  playing field 
between public and private companies through a law to abolish tax privileges of SOEs, 
albeit with exemptions on the basis of national security, and through the adoption of a 
state ownership policy,  aiming  at  reducing  the presence of the state in  the economy, 
which  remains  large  and  distorting  despite  recent  limited  progress  and  clarifying  the 
rationale of continued state involvement in  certain strategic sectors.  However, Egypt 
did  not  implement  its  commitment  to  make  the  currency  durably  flexible  in  2023, 
leading  to  a  largely  stable  official  exchange  rate  and  a  substantial  parallel  currency 
market  with  a  significantly  depreciated  and  highly  volatile  exchange  rate.  This 
fragmentation weighed heavily on foreign investment and domestic business activity.  

(13)  Egypt re-engaged with the IMF in early 2024 and reached a staff-level agreement on 6 
March 2024 on a  revamped Extended Fund  Facility  programme scaled up to  USD 8 
billion.  The  new  programme  is  expected  to  be  adopted  by  IMF  Executive  Board 
decision  in  March  2024  and  aims  to  address  the  areas  of  1)  credible  exchange  rate 

4 

Established  by  Regulation  (EU)  2021/947  of  the  European  Parliament  and  of  the  Council  of  9  June 
2021 establishing the Neighbourhood, Development and International Cooperation Instrument – Global 
Europe, amending and repealing Decision No 466/2014/EU and repealing Regulation (EU) 2017/1601 
and Council Regulation (EC, Euratom) No 480/2009 (OJ L 209, 14.6.2021, p. 1) 

EN 

10 

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flexibility,  2)  sustainable  tightening  of  monetary  policy,  3)  fiscal  consolidation  to 
preserve debt sustainability, 4) a new framework to rein in infrastructure spending, 5) 
providing  adequate  levels  of  social  spending  to  protect  vulnerable  groups,  and  6) 
implementation of the State Ownership Policy and reforms to level the playing field. 
Together  with 
level  agreement’s  signature,  Egypt  also  enacted  a 
flexibilisation of the exchange rate, and raised the central bank’s key policy rate by a 
sizeable 600 basis points, in line with the IMF programme’s priorities.  

the  staff 

(14) 

In  view  of  a  worsening  economic  situation  and  outlook  clouded  by  substantial 
downside risks in relation to ongoing external shocks, Egypt requested complementary 
macro-financial assistance from the Union on 12 March 2024.  

(15)  The  current  crisis  in  Egypt  and  the  region  have  exacerbated  the  country’s  financing 
needs, with a substantial overall financing gap in the upcoming fiscal year (FY, July-
June)  2024/25,  in  particular  in  the  second  half  of  2024.  This  makes  it  imperative  to 
make sure that a first significant contribution via MFA could already be provided by 
the  end  of  2024.  This  appears  impossible  if  the  decision  was  adopted  in  accordance 
with  Article 212 TFEU  under the ordinary legislative procedure, taking into  account 
the constraints imposed by the upcoming end of the Parliament's legislative period in 
conjunction with the time still needed thereafter to fully enact the MFA, including for 
agreeing on a set of policy reforms to underpin the assistance. It is therefore justified 
to exceptionally use Article 213 TFEU providing for the adoption of the decision by 
the  Council  only  for  the  present  first  part  of  the  MFA  package.  The  use  of  Art.  213 
TFEU  will  remain  exceptional  and  does  not  constitute  a  precedent  for  any  future 
proposals of MFA, which will in principle continue to be based on Art. 212 TFEU. 

(16)  Given  that  Egypt  is  a  country  covered  by  the  European  Neighbourhood  Policy,  it 
should  be  considered  to  be  eligible  to  receive  macro-financial  assistance  from  the 
Union.  

(17)  The Union’s macro-financial assistance should be an exceptional instrument of untied 
and  undesignated  balance-of-payments  support,  which  aims  at  addressing  the 
the 
beneficiary’s 
implementation  of  a  policy  programme  containing  strong  immediate  adjustment  and 
structural reform measures designed to improve the balance-of-payments position.  

immediate  external  financing  needs  and  should  underpin 

(18)  Given that there is still a significant residual external financing gap in Egypt's balance 
of payments over and above the resources provided by the IMF and other multilateral 
institutions, the Union macro-financial assistance to be provided to Egypt is, under the 
current exceptional circumstances, considered to be an appropriate response to Egypt's 
request  for  support  to  the  economic  stabilisation,  in  conjunction  with  the  IMF 
programme. The Union's macro-financial assistance package, including the MFA of up 
to EUR 1 billion under this proposal, would support the economic stabilisation and the 
structural reform agenda of Egypt, supplementing resources made available under the 
IMF's financial arrangement. 

(19)  The  Union's  macro-financial  assistance  should  aim  to  support  the  restoration  of  a 
sustainable external financing situation for Egypt thereby supporting its economic and 
social development. 

(20)  The determination of the amount of the Union's macro-financial assistance is based on 
a  complete  quantitative  assessment  of  Egypt's  residual  external  financing  needs  and 
takes into account its capacity to finance itself with its own resources, in particular the 
international reserves at its disposal. The Union's macro-financial assistance is part of 

EN 

11 

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an international joint effort, effectively complementing the programmes and resources 
provided  by  the  IMF  and  the  World  Bank.  The  determination  of  the  amount  of  the 
assistance  also  takes  into  account  expected  financial  contributions  from  multilateral 
donors and the need to ensure fair burden sharing between the Union and other donors, 
as  well  as  the  pre-existing  deployment  of  the  Union's  other  external  financing 
instruments in Egypt and the added value of the overall Union involvement.  

(21)  The Commission should ensure that the Union's macro-financial assistance is  legally 
and substantially in line with the key principles, objectives and measures taken within 
the different areas of external action and with other relevant Union policies. 

(22)  The  Union's  macro-financial  assistance  should  support  the  Union's  external  policy 
towards  Egypt.  The  Commission  services  and  the  European  External  Action  Service 
(EEAS)  should  work  closely  together  throughout  the  macro-financial  assistance 
operation  in  order  to  coordinate  and  ensure  the  consistency  of  theUnion  external 
policy. 

(23)  The Union's  macro-financial assistance should support Egypt's  commitment to  foster 
values shared with the Union, including democracy, the rule of law, good governance, 
respect for human rights, sustainable development and poverty reduction, as well as its 
commitment to the principles of open, rules-based and fair trade. 

(24)  A pre-condition for granting the Union's macro-financial assistance to Egypt should be 
that  the  country  continues  to  make  concrete  and  credible  steps  towards  respecting 
effective  democratic  mechanisms  –  including  a  multi-party  parliamentary  system  – 
and the rule of law, and guarantees respect for human rights. In addition, the specific 
objectives of the Union's macro-financial assistance should strengthen the efficiency, 
transparency  and  accountability  of  the  public  finance  management  systems,  the 
governance  and  supervision  of  the  financial  sector  in  Egypt  and  promote  structural 
reforms  aimed  at  supporting  sustainable  and  inclusive  growth,  decent  employment 
creation  and  fiscal  consolidation.  The  fulfillment  of  the  pre-condition  and  the 
achievement  of  the  specific  objectives  should  be  regularly  monitored  by  the 
Commission services and the European External Action Service. 

(25) 

In  order  to  ensure  that  the  Union’s  financial  interests  linked  to  the  Union’s  macro-
financial assistance are protected efficiently, Egypt should take appropriate measures 
relating  to  the  prevention  of,  and  fight  against,  fraud,  corruption  and  any  other 
irregularities  linked  to  the  assistance.  In  addition,  a  loan  agreement  to  be  concluded 
between  the  Commission  and  the  Egyptian  authorities  should  contain  provisions 
authorising European Anti-Fraud Office (OLAF) to carry out investigations, including 
on-the-spot checks and inspections, in accordance with the provisions and procedures 
laid down in Regulation (EU, Euratom) No 883/2013 of the European Parliament and 
of the Council5 and Council Regulation (Euratom, EC) No 2185/966, the Commission 
and  the  Court  of  Auditors  to  carry  out  audits  and  the  European  Public  Prosecutor’s 
Office to exercise its competences with regard to the provision of the Union’s macro-
financial assistance during and after its availability period. 

5 

6 

Regulation  (EU,  Euratom)  No  883/2013  of  the  European  Parliament  and  of  the  Council  of  11 
September 2013 concerning investigations conducted by the  European Anti-Fraud Office (OLAF) and 
repealing Regulation (EC) No 1073/1999 of the European Parliament and of the Council and Council 
Regulation (Euratom) No 1074/1999 (OJ L 248, 18.9.2013, p. 1). 
Council  Regulation  (Euratom,  EC)  No  2185/96 of  11  November  1996  concerning on-the-spot  checks 
and inspections carried out by the Commission in order to protect the European Communities’ financial 
interests against fraud and other irregularities (OJ L 292, 15.11.1996, p. 2). 

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12 

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(26)  Release of the Union's macro-financial assistance is without prejudice to the powers of 

the European Parliament and the Council as budgetary authority.  

(27)  The  amounts  of  the  provision  required  for  macro-financial  assistance  in  the  form  of 
loans  should  be  consistent  with  the  budgetary  appropriations  provided  for  in  the 
multiannual financial framework. 

(28)  The  Union's  macro-financial  assistance  should  be  managed  by  the  Commission.  In 
order  to  ensure  that  the  European  Parliament  and  the  Council  are  able  to  follow  the 
implementation  of  this  Decision,  the  Commission  should  regularly  inform  them  of 
developments relating to the assistance and provide them with relevant documents. 

(29) 

In  order  to  ensure  uniform  conditions  for  the  implementation  of  this  Decision, 
implementing powers should be conferred on the Commission. Those powers should 
be  exercised  in  accordance  with  Regulation  (EU)  No 182/2011  of  the  European 
Parliament and of the Council7. 

(30)  The  Union's  macro-financial  assistance  should  be  subject  to  economic  policy 
conditions,  to  be  laid  down  in  a  Memorandum  of  Understanding.  In  order  to  ensure 
uniform conditions of implementation and for reasons of efficiency, the Commission 
should be empowered to negotiate such conditions with the Egyptian authorities under 
the  supervision  of  the  committee  of  representatives  of  the  Member  States  in 
accordance  with  Regulation  (EU)  No 182/2011.  Under  that  Regulation,  the  advisory 
procedure should, as a general rule, apply in all cases other than as provided for in that 
Regulation.  Considering  the  potentially  important  impact  of  assistance  of  more  than 
EUR  90 million,  it  is  appropriate  that  the  examination  procedure  be  used  for 
operations  above  that  threshold.  Considering  the  amount  of  the  Union's  macro-
financial assistance to Egypt, the examination procedure should apply to the adoption 
of  the  Memorandum  of  Understanding,  and  to  any  reduction,  suspension  or 
cancellation of the assistance. 

HAS ADOPTED THIS DECISION: 

1. 

2. 

3. 

7 

Article 1 

The  Union  shall  make  macro-financial  assistance  of  a  maximum  amount  of  up  to 
EUR 1 billion available to  Egypt  ("the Union's macro-financial assistance"), with  a 
view to supporting Egypt's economic stabilisation and a substantive reform agenda. 
The  assistance  shall  contribute  to  covering  Egypt's  balance  of  payments  needs  as 
identified in the IMF programme.  

In order to finance the Union’s macro-financial assistance, the Commission shall be 
empowered,  on  behalf  of  the  Union,  to  borrow  the  necessary  funds  in  the  capital 
markets or from financial institutions and to on-lend them to Egypt. 

The  release  of  the  Union's  macro-financial  assistance  shall  be  managed  by  the 
Commission in a manner consistent with the agreements or understandings reached 
between the IMF and Egypt, and with the key principles and objectives of economic 
reforms set out in the EU-Egypt Association Agreement. 

Regulation  (EU)  No 182/2011  of  the  European  Parliament  and  of  the  Council  of  16 February  2011 
laying down the rules and general principles concerning mechanisms for control by Member States of 
the Commission's exercise of implementing powers (OJ L 55, 28.2.2011, p. 13). 

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4. 

5. 

1. 

2. 

3. 

1. 

2. 

The Commission shall regularly inform the European Parliament and the Council of 
any  developments  regarding  the  Union's  macro-financial  assistance,  including 
disbursements  thereof,  and  shall  provide  those  institutions  with  the  relevant 
documents in due time. 

The Union’s macro-financial assistance shall be made available starting on the first 
day  after  the  entry  into  force  of  the  Memorandum  of  Understanding  referred  to  in 
Article 3(1) for a period of nine months. 

Where the financing needs of Egypt decrease fundamentally during the period of the 
disbursement  of  the  Union's  macro-financial  assistance  compared  to  the  initial 
projections,  the  Commission,  acting  in  accordance  with  the  examination  procedure 
referred  to  in  Article 7(2),  shall  reduce  the  amount  of  the  assistance  or  suspend  or 
cancel it. 

Article 2  

A  pre-condition  for  granting  the  Union's  macro-financial  assistance  shall  be  that 
Egypt  continues  to  make  concrete  and  credible  steps  towards  respecting  effective 
democratic  mechanisms  –  including  a  multi-party  parliamentary  system  –  and  the 
rule of law, and guarantees respect for human rights. 

The  Commission  services  and  the  European  External  Action  Service  shall  monitor 
the  fulfilment  of  this  pre-condition  throughout  the  life-cycle  of  the  Union's  macro-
financial assistance.  

Paragraphs  1  and  2  shall  be  applied  in  accordance  with  Council  Decision 
2010/427/EU8. 

Article 3 

The  Commission,  in  accordance  with  the  examination  procedure  referred  to  in 
Article 7(2),  shall  agree  with  the  Egyptian  authorities  on  clearly  defined  economic 
policy  and  financial  conditions,  focusing  on  structural  reforms  and  sound  public 
finances, to which the Union's macro-financial assistance is to be subject, to be laid 
down  in  a  Memorandum  of  Understanding  ("the  Memorandum  of  Understanding") 
which shall include a timeframe for the achievement of those reforms. The economic 
policy and financial conditions set out in the Memorandum of Understanding shall be 
consistent  with  the  agreements  or  understandings  referred  to  in  Article 1(3), 
including  the  macroeconomic  adjustment  and  structural  reform  programmes 
implemented by Egypt with the support of the IMF.  

The  conditions  referred  to  in  paragraph  1  shall  aim,  in  particular,  at  enhancing  the 
efficiency,  transparency  and  accountability  of  the  public  finance  management 
systems  in  Egypt,  including  for  the  use  of  the  Union's  macro-financial  assistance. 
Progress  in  mutual  market  opening,  the  development  of  rules-based  and  fair  trade, 
and  other  priorities  in  the  context  of  the  Union's  external  policy  shall  also  be  duly 
taken into account  when designing the policy measures. Progress  in  attaining those 
objectives shall be regularly monitored by the Commission. 

8 

Council  Decision  2010/427/EU  of  26 July  2010  establishing  the  organisation  and  functioning  of  the 
European External Action Service (OJ L 201, 3.8.2010, p. 30). 

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14 

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3. 

4. 

1. 

2. 

3. 

(a) 

(b) 

(c) 

4. 

5. 

1. 

2. 

The  detailed  financial  terms  of  the  Union's  macro-financial  assistance  shall  be  laid 
down  in  a  loan  agreement  to  be  concluded  between  the  Commission  and  the 
Egyptian authorities (the “Loan Agreement”).  

The  Commission  shall  verify,  at  regular  intervals,  that  the  conditions  referred  to  in 
Article 4(3)  continue  to  be  met,  including  whether  the  economic  policies  of  Egypt 
are in accordance with the objectives of the Union's macro-financial assistance. For 
that  verification,  the  Commission  shall  coordinate  closely  with  the  IMF  and  the 
World Bank, and, where necessary, with the European Parliament and the Council. 

Article 4 

Subject  to  the requirements referred to  in  paragraph 3, the Union’s macro-financial 
assistance shall be made available by the Commission in a single instalment, in the 
form of a loan. The Commission shall decide on the timeframe for the disbursement 
of the instalment. The instalment may be disbursed in one or more tranches. 

The amounts of the Union's macro-financial assistance provided in the form of loans 
shall be provisioned, where required, in accordance with Regulation (EU) 2021/947 
of the European Parliament and of the Council.  

The  Commission  shall  decide  on  the  release  of  the  instalment  subject  to  the 
fulfilment of the following conditions: 

the pre-condition set out in Article 2(1); 

a  continuous  satisfactory  track  record  of  implementing  a  policy  programme  that 
contains  strong  adjustment  and  structural  reform  measures  supported  by  a  non-
precautionary IMF credit arrangement;  

the  satisfactory  implementation  of  the  economic  policy  conditions  and  financial 
conditions agreed in the Memorandum of Understanding. 

Where the conditions in paragraph 3 are not met, the Commission shall temporarily 
suspend  or  cancel  the  disbursement  of  the  Union's  macro-financial  assistance.  In 
such  cases,  it  shall  inform  the  European  Parliament  and  the  Council  of  the  reasons 
for that suspension or cancellation.  

The  Union's  macro-financial  assistance  shall  be  disbursed  to  the  Central  Bank  of 
Egypt. Subject to the provisions to be agreed in the Memorandum of Understanding, 
including a confirmation of residual budgetary financing needs, the Union funds may 
be transferred by the Central Bank of Egypt to the Egyptian Ministry of Finance as 
the final beneficiary.  

Article 5 

In  order  to  finance  the  support  under  the  macro-financial  assistance  in  the  form  of 
loans,  the  Commission  shall  be  empowered,  on  behalf  of  the  Union,  to  borrow  the 
necessary  funds  on  the  capital  markets  or  from  financial  institutions  in  accordance 
with Article 220a of Regulation (EU, Euratom) 2018/1046. 

The  Commission  shall  enter  into  a  loan  agreement  with  Egypt  in  respect  of  the 
amount referred to in Article 1. The detailed terms of the support under the MFA in 
the form of loans shall be laid down in a loan agreement in accordance with Article 
220 of the  Financial Regulation,  to  be concluded between the Commission  and  the 
Egyptian authorities. The loan agreement shall lay down the availability period and 

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15 

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3. 

1. 

2. 

3. 

1. 

2. 

1. 

(a) 

(b) 

(c) 

2. 

the detailed terms of the support under the macro-financial assistance in the form of 
loans, including in relation to the internal control systems. The loans shall be granted 
at  terms  that  allow  Egypt  to  repay  the  loan  over  a  long  period.  The  maximum 
duration of the loans shall be 35 years.   

The  Commission  shall  inform  the  European  Parliament  and  the  Council  of  any 
developments in the operations referred to in paragraph 2. 

Article 6 

The  Union's  macro-financial  assistance  shall  be  implemented  in  accordance  with 
Regulation  (EU,  Euratom)  No  2018/1046  of  the  European  Parliament  and  of  the 
Council9.  

The  implementation  of  the  Union's  macro-financial  assistance  shall  be  under  direct 
management.  

the 

implementation  of 

Before 
the 
Commission  shall  assess,  by  means  of  an  operational  assessment,  the  soundness  of 
Egypt's  financial  arrangements,  the  administrative  procedures,  and  the  internal  and 
external control mechanisms which are relevant to the assistance. 

the  Union's  macro-financial  assistance, 

Article 7 

The  Commission  shall  be  assisted  by  a  committee.  That  committee  shall  be  a 
committee within the meaning of Regulation (EU) No 182/2011. 

Where  reference  is  made  to  this  paragraph,  Article  5  of  Regulation  (EU)  No 
182/2011 shall apply. 

Article 8 

By  30 June  of  each  year,  the  Commission  shall submit  to  the  European  Parliament 
and to the Council a report on the implementation of this Decision in the preceding 
year, including an evaluation of that implementation. The report shall: 

examine the progress made in implementing the Union's macro-financial assistance; 

assess  the  economic  situation  and  prospects  of  Egypt,  as  well  as  progress  made  in 
implementing the policy measures referred to in Article 3(1); 

indicate the connection between the economic policy reform measures laid down in 
the  Memorandum  of  Understanding,  Egypt’s  on-going  economic  and  fiscal 
performance  and  the  Commission’s  decisions  to  release  the  instalments  of  the 
Union's macro-financial assistance. 

Not  later  than  two  years  after  the  expiry  of  the  availability  period  referred  to  in 
Article 1(4),  the  Commission  shall  submit  to  the  European  Parliament  and  to  the 
Council  an  ex-post  evaluation  report,  assessing  the  results  and  efficiency  of  the 
completed  Union's  macro-financial  assistance  and  the  extent  to  which  it  has 
contributed to the aims of the assistance. 

9 

Regulation  (EU,  Euratom)  No 2018/1046  of  the  European  Parliament  and  of  the  Council  of  18  July 
2018 on the financial rules applicable to the general budget of the Union and repealing Regulation (EC, 
Euratom) No 966/2012 (OJ L 193, 30.07.2018, p. 1). 

EN 

16 

  EN 

 
Article 9 

This Decision shall enter into force on the day after its publication in the Official Journal of 
the European Union.  

Done at Brussels, 

For the Council 
The President 

EN 

17 

  EN 

 
  
 
 
  
 
LEGISLATIVE FINANCIAL STATEMENT 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE 

1.1.  Title of the proposal/initiative 

1.2.  Policy area(s) concerned 

1.3.  The proposal/initiative relates to: 

1.4.  Objective(s) 

1.4.1. General objective(s) 

1.4.2. Specific objective(s) 

1.4.3. Expected result(s) and impact 

1.4.4. Indicators of performance 

1.5.  Grounds for the proposal/initiative 

1.5.1. Requirement(s)  to  be  met  in  the  short  or  long  term  including  a  detailed 
timeline for roll-out of the implementation of the initiative 

1.5.2. Added  value  of  Union  involvement  (it  may  result  from  different  factors,  e.g. 
coordination gains, legal certainty, greater effectiveness or complementarities). For 
the purposes of this point 'added value of Union involvement' is the value resulting 
from  Union  intervention  which  is  additional  to  the  value  that  would  have  been 
otherwise created by Member States alone. 

1.5.3. Lessons learned from similar experiences in the past 

1.5.4. Compatibility  with  the  Multiannual  Financial  Framework  and  possible 
synergies with other appropriate instruments 

1.5.5. Assessment  of  the  different  available  financing  options,  including  scope  for 
redeployment 

1.6.  Duration and financial impact of the proposal/initiative 

1.7.  Management mode(s) planned 

2.  MANAGEMENT MEASURES 

2.1.  Monitoring and reporting rules 

2.2.  Management and control system(s) 

2.2.1. Justification  of 
mechanism(s), the payment modalities and the control strategy proposed 

the  management  mode(s), 

funding 

the 

implementation 

2.2.2. Information  concerning the risks identified and the internal control  system(s) 
set up to mitigate them 

2.2.3. Estimation  and  justification  of  the  cost-effectiveness  of  the  controls  (ratio  of 
"control  costs  ÷  value  of  the  related  funds  managed"),  and  assessment  of  the 
expected levels of risk of error (at payment & at closure) 

2.3.  Measures to prevent fraud and irregularities 

3. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE 

EN 

18 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.1.  Heading(s)  of  the  multiannual  financial  framework  and  expenditure 
budget line(s) affected 

3.2.  Estimated financial impact of the proposal on appropriations 

3.2.1. Summary of estimated impact on operational appropriations 

3.2.2. Estimated output funded with operational appropriations 

3.2.3. Summary of estimated impact on administrative appropriations 

3.2.4. Compatibility with the current multiannual financial framework 

3.2.5. Third-party contributions 

3.3.  Estimated impact on revenue 

EN 

19 

  EN 

 
 
 
 
 
 
 
 
– 

– 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1.  Title of the proposal/initiative 

Proposal  for  a  Decision  of  the  European  Parliament  and  of  the  Council  providing 
Macro-financial assistance to the Republic of Egypt. 

– 

1.2.  Policy area(s) concerned  

Policy area:  Economic and Financial Affairs 

Activity: 

International economic and financial affairs 

– 

1.3.  The proposal/initiative relates to:  

X a new action  
 a new action following a pilot project/preparatory action10  

 the extension of an existing action  

 a merger or redirection of one or more actions towards another/a new action  

– 

– 

1.4.  Objective(s) 

1.4.1. General objective(s) 

1.4.1. The  Commission's  multiannual  strategic  objective(s) 
proposal/initiative  

targeted  by 

the 

 “An Economy that works for people” 

“A stronger Europe in the world” 

– 

1.4.2. Specific objective(s) 

(a)  Supporting macro-financial stability and promoting growth-enhancing reforms 
outside the EU, including through regular economic dialogues with key partners and 
by providing macro-financial assistance.  

– 

1.4.3. Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

(1)  Contribute to covering the external financing needs of Egypt in the context of a 
significant  deterioration  of  their  external  accounts  brought  by  recent  geopolitical 
developments.  

(2)  Alleviate the partner’s budgetary financing needs. 

(3)  Support the fiscal consolidation effort and external stabilisation in the context 
of the IMF programme. 

(4)  Support  structural  reforms  aimed  at  improving  the  overall  macroeconomic 
management,  strengthening  economic  governance  and  transparency,  and  improving 
conditions for sustainable growth. 

10 

As referred to in Article 58(2)(a) or (b) of the Financial Regulation. 

EN 

20 

  EN 

 
 
 
 
– 

1.4.4. Indicators of performance 

Specify the indicators for monitoring progress and achievements. 

The authorities of Egypt will be required to report on a set of economic indicators to 
the Commission services on a regular basis and provide a comprehensive report on 
the  compliance  with  the  agreed  policy  reforms  ahead  of  the  disbursement  of  the 
instalments of the assistance.  

The  Commission  services  will  continue  to  monitor  public  finance  management, 
following  the  operational  assessment  of  the  financial  circuits  and  administrative 
procedures  in  Egypt.  The  EU  Delegation  in  the  partners  will  also  provide  regular 
reporting  on  issues  relevant  for  the  monitoring  of  the  assistance.  The  Commission 
services  will  remain  in  close  contact  with  the  IMF  and  the  World  Bank  to  benefit 
from their insights from their on-going activities in the respective partner.  

An annual report to the Council and European Parliament is foreseen in the proposed 
legislative decision, including an assessment of the implementation of this operation. 
An  independent  ex-post  evaluation  of  the  assistance  will  be  carried  out  within  two 
years after the expiry of the implementation period. 

(a)  Effectiveness  and  timeliness:  indicators  should  allow  to  monitor  performance 
by providing information on progress on a regular basis and on achievements 
along the programming period. 

(b)  Efficiency:  processes  should  be  optimized  for  collection  and  processing  of 

data, avoiding unnecessary or duplicative requests for information 

(c)  Relevance of the indicators and the need to limit the associated administrative 

burden. 

(d)  Clarity: indicators should be delivered in a clear and understandable form, with 
supporting  metadata  and  in  a  form  that  facilitates  proper  interpretation  and 
meaningful communication. 

1.5.  Grounds for the proposal/initiative  

1.5.1. Requirement(s)  to  be  met  in  the  short  or  long  term  including  a  detailed 
timeline for roll-out of the implementation of the initiative 

The  disbursement  of  the  assistance  will  be  subject  to  the  fulfilment  of  the  political 
pre-conditions and a satisfactory track record in the implementation of the economic 
programme between Egypt and the IMF, which Staff level agreement was reached on 
6 March 2024, following implementation by the authorities of Egypt of a number of 
prior actions. In addition, the Commission shall agree with the authorities of Egypt 
on specific policy reforms, listed in a Memorandum of Understanding.  

The assistance is planned to be disbursed in one instalment which is expected to take 
place in in late 2024. 

Specific  provisions  on  the  prevention  of  fraud  and  other  irregularities,  consistent 
with the Financial Regulation, are applicable.    

– 

– 

EN 

21 

  EN 

 
 
 
– 

1.5.2. Added  value  of  Union  involvement  (it  may  result  from  different  factors,  e.g. 
coordination gains, legal certainty, greater effectiveness or complementarities). For 
the purposes of this point 'added value of Union involvement' is the value resulting 
from  Union  intervention,  which  is  additional  to  the  value  that  would  have  been 
otherwise created by Member States alone. 

The instrument of macro-financial assistance is a policy-based instrument directed to 
alleviate  short-  and  medium-term  external  financial  needs.  In  the  context  of  the 
ongoing regional crisis, MFA will help to provide economic and fiscal policy space 
for the authorities to mount an effective economic response to the crisis. By helping 
the  partner  overcome  the  economic  difficulties  amplified  by  the  recent  geopolitical 
developments and in particular the war in the Middle-East and the consequent red sea 
crisis, the proposed MFA will contribute to promoting macroeconomic and political 
stability in the partners. MFA will complement the resources made available by the 
international  financial 
institutions,  bilateral  donors  and  other  EU  financial 
institutions. In doing so, it will contribute to the overall effectiveness of the financial 
support  provided  by  the  international  community,  as  well  as  of  other  EU  financial 
assistance, including budgetary support operations. 

Furthermore, by providing long-term financing in highly concessional terms, usually 
lower  than  the  rest  of  international  or  bilateral  donors,  the  MFA  programme  is 
expected to help the government to execute its budget without fiscal deviations and 
to contribute to debt sustainability. 

In  addition  to  the  financial  impact  of  the  MFA,  the  proposed  programme  will 
strengthen the government’s reform commitment. This result will be achieved, inter 
alia,  through  appropriate  reform  measures  accompanying  the  disbursement  of  the 
assistance.  

– 

1.5.3. Lessons learned from similar experiences in the past 

Macro-financial  assistance  operations  in  partners  are  subject  to  ex-post  evaluation. 
Evaluations  conducted  thus  far  (on  completed  MFA  programmes),  conclude  that 
MFA  operations  do  contribute,  albeit  sometimes  modestly  and  indirectly,  to  the 
improvement  of  the  external  sustainability,  the  macroeconomic  stability  and  the 
achievement of structural reforms in the partner. In most cases, MFA operations had 
a positive effect on the balance of payments of the partner and helped to relax their 
budgetary constraints. They also led to somewhat higher economic growth. 

– 

1.5.4. Compatibility  with  the  Multiannual  Financial  Framework  and  possible 
synergies with other appropriate instruments 

Compatibility with the Multiannual Financial Framework 

In the 2021-2027 multiannual financial framework, the provisioining of MFA loans 
will  be  covered  by  the  External  Action  Guarantee  within  Global  Europe 
(Neighbourhood,  Development  and  International  Cooperation  Instrument).  Possible 
synergies with other appropriate instruments 

– 

1.5.5. Assessment  of  the  different  available  financing  options,  including  scope  for 
redeployment 

EN 

22 

  EN 

 
 
By  using  loans,  this  MFA  operation  increases  the  effectiveness  of  the  EU  budget 
through the leverage effect and provides for the best cost-efficient option.  

The  Commission  is  empowered  to  borrow  funds  from  capital  markets  on  behalf  of 
both  the  European  Union  and  Euratom  using  the  guarantee  of  the  EU  budget.  The 
aim is to obtain funds from the market at the best available rates due to the top credit 
status  (AAA-rated  by  Fitch,  Moody's  and  DBRS,  AA  by  S&P,  all  with  stable 
outlook)  of  the  EU/Euratom  and  then  on-lend  them  to  eligible  borrowers  in  the 
context of lending under the EFSM, BoP, MFA and to Euratom projects. Borrowing 
and  lending  is  conducted  as  a  back-to-back  operation,  ensuring  that  the  EU  budget 
does not take any interest rate or foreign exchange risk. The target of obtaining funds 
at  the  best  available  rates  for  borrowing  and  lending  activities  has  been  achieved 
because those rates are in line with peer institutions (EIB, EFSM, and ESM). 

EN 

23 

  EN 

 
 
– 

• 

• 

– 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

1.6.  Duration and financial impact of the proposal/initiative 

X limited duration  

X  In effect from year 2024 to year 2025 

Financial  impact  from  YYYY  to  YYYY  for  commitment  appropriations  and 

 
from YYYY to YYYY for payment appropriations.  

 unlimited duration 

Implementation with a start-up period from YYYY to YYYY, 

followed by full-scale operation. 

1.7.  Method(s) of budget implementation planned11  

X Direct management by the Commission 

X by its departments, including by its staff in the Union delegations;  

 

by the executive agencies  

 Shared management with the Member States  

 Indirect management by entrusting budget implementation tasks to: 

 third countries or the bodies they have designated; 

 international organisations and their agencies (to be specified); 

 the EIB and the European Investment Fund; 

 bodies referred to in Articles 70 and 71 of the Financial Regulation; 

 public law bodies; 

  bodies  governed  by  private  law  with  a  public  service  mission  to  the  extent  that 
they are provided with adequate financial guarantees; 

 bodies governed by the private law of a Member State that are entrusted with the 
implementation  of a public-private partnership and that are provided  with  adequate 
financial guarantees; 

  bodies  or  persons  entrusted  with  the  implementation  of  specific  actions  in  the 
CFSP pursuant to Title V of the TEU, and identified in the relevant basic act. 

11 

Details of budget implementation methods and references to the Financial Regulation may be found on 
the BUDGpedia site: https://myintracomm.ec.europa.eu/corp/budget/financial-rules/budget-
implementation/Pages/implementation-methods.aspx 

EN 

24 

  EN 

 
– 

– 

2.  MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

Specify frequency and conditions. 

The  actions  to  be  financed  under  this  Decision  will  be  implemented  under  direct 
management  by  the  Commission  from  headquarters  and  with  support  of  the  Union 
delegations.  

This assistance is of macroeconomic nature and its design is consistent with the IMF-
supported programme. The monitoring of the action by the Commission services will 
take  place  on  the  basis  of  progress  in  the  implementation  of  the  IMF  arrangement 
and the implementation of specific reform measures to be agreed with the authorities 
of  the  partners  in  a  Memorandum  of  Understanding  with  a  frequency  that  is 
consistent with the number of instalments (See also point 1.4.4). 

2.2.  Management and control system(s)  

2.2.1. Justification  of 
mechanism(s), the payment modalities and the control strategy proposed 

the  management  mode(s), 

funding 

the 

implementation 

The  actions  to  be  financed  under  this  Decision  will  be  implemented  under  direct 
management  by  the  Commission  from  headquarters  and  with  support  of  the  Union 
delegations.  

MFA disbursements are dependent on successful reviews, and tied to the fulfilment 
of reform measures accompanying each operation. The implementation of reforms is 
closely  monitored  by  the  Commission,  in  close  coordination  with  the  Union 
Delegations. 

2.2.2. Information  concerning the risks identified and the internal control  system(s) 
set up to mitigate them 

2.2.3. Estimation  and  justification  of  the  cost-effectiveness  of  the  controls  (ratio  of 
"control  costs  ÷  value  of  the  related  funds  managed"),  and  assessment  of  the 
expected levels of risk of error (at payment & at closure)  

The control systems in place, such as the ex-ante operational assessments or the ex-
post assessments, ensured an effective error rate for the MFA payments of 0%. There 
are no known  cases  of  fraud, corruption or illegal  activity. MFA operations have  a 
clear  intervention  logic,  one  that  allows  the  Commission  to  evaluate  their  impact. 
The  controls  enable  the  confirmation  of  assurance  and  of  attainment  of  policy 
objectives and priorities. 

– 

– 

– 

– 

– 

2.3.  Measures to prevent fraud and irregularities  

Specify existing or envisaged prevention and protection measures, e.g. from the Anti-Fraud Strategy. 

To mitigate the risks of fraudulent use several measures have been and will be taken:  

First,  the  Loan  Agreement  will  comprise  a  set  of  provisions  on  inspection,  fraud 
prevention, audits and recovery of funds in case of fraud or corruption. It is further 
envisaged that a number of specific policy reform  measures will be attached to  the 

EN 

25 

  EN 

 
 
 
assistance,  including  in  the  area  of  public  finance  management,  with  a  view  to 
strengthening  efficiency,  transparency  and  accountability.  Also,  the  assistance  will 
be paid to a specific account of the Central Bank of the partner.  

Finally, the assistance will be liable to verification, control  and auditing procedures 
under  the  responsibility  of  the  Commission,  including  the  European  Anti-Fraud 
Office (OLAF), and the European Court of Auditors as foreseen by Article 129 of the 
Financial Regulation 

EN 

26 

  EN 

– 

– 

3. 
ESTIMATED 
PROPOSAL/INITIATIVE  

FINANCIAL 

IMPACT 

OF 

THE 

3.1.  Heading(s)  of  the  multiannual  financial  framework  and  expenditure 
budget line(s) affected  

• 

Existing budget lines  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of  
expenditure 

Contribution  

Heading of 
multiannual 
financial 
framework 

Number  

Diff./Non-
diff.12 

from 
EFTA 
countries
13 

from 
candidate 
countries 
and 
potential 
candidates
14 

fromother 
third 
countries 

other assigned 
revenue 

14.02.01.70  NDICI  —  Global  Europe  — 
Provisioning of the common provisioning 
fund [MFA loans – EAG] 

Diff. 

NO 

NO 

NO 

NO 

• 

New budget lines requested – Not applicable 

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of 
expenditure 

Heading of 
multiannual 
financial 
framework 

Number  

Diff./Non-
diff. 

from 
EFTA 
countries 

Contribution  

from 
candidate 
countries 
and 
potential 
candidates 

from  
other 
third 
countries 

other assigned 
revenue  

[XX.YY.YY.YY] 

YES/NO  YES/NO  YES/NO 

YES/NO 

12 
13 
14 

Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations. 
EFTA: European Free Trade Association.  
Candidate countries and, where applicable, potential candidates from the Western Balkans. 

EN 

27 

  EN 

 
 
 
 
 
 
 
– 

– 

3.2.  Estimated financial impact of the proposal on appropriations  

3.2.1. Summary of estimated impact on operational appropriations  

 The proposal/initiative does not require the use of operational appropriations  

X  The proposal/initiative requires the use of operational appropriations, as explained below: 

Heading of multiannual financial  
framework  

6 

Heading 6 - 'Neighbourhood and the World'  

EUR million (to three decimal places) 

DG: ECFIN 

Year 
2024 

Year 
2025 

Year 
2026 

Year 
2027 

Enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

TOTAL 

 Operational appropriations  

Budget line15 

14 02 01 70 NDICI — Global Europe — 
Provisioning of the common provisioning 
fund [MFA loans – EAG]16 

Commitments 

(1a) 

Payments 

(2a) 

90  

90 

Appropriations  of  an  administrative  nature  financed  from  the 
envelope of specific programmes17  

Budget line 

90 

90 

15 

16 

17 

EN 

According to the official budget nomenclature. 

To be reinforced from the NDICI Southern Neighbourhood, budget line 14 02 01 10. 

Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former ‘BA’ lines), indirect research, direct research. 

28 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL appropriations 
for DG ECFIN 

Commitments 

Payments 

=1a+1b 
+3 

=2a+2b 

+3 

 TOTAL operational appropriations  

Commitments 

Payments 

  TOTAL  appropriations  of  an  administrative  nature 
financed from the envelope for specific programmes  

(4) 

(5) 

(6) 

TOTAL appropriations  
under HEADING 6 
of the multiannual financial framework 

Commitments 

=4+ 6 

Payments 

=5+ 6 

90 

90 

90 

90 

90 

90 

If more than one operational heading is affected by the proposal / initiative, repeat the section above: 

  TOTAL  operational  appropriations  (all 
operational headings) 

Commitments 

Payments 

 TOTAL appropriations of an administrative nature financed 
from  the  envelope  for  specific  programmes  (all  operational 
headings) 

(4) 

(5) 

(6) 

TOTAL appropriations  
under HEADINGS 1 to 6 
of the multiannual financial framework 
(Reference amount) 

Commitments 

=4+ 6 

Payments 

=5+ 6 

90 

90 

90 

90 

90 

90 

EN 

29 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Heading of multiannual financial  
framework  

7 

‘Administrative expenditure’ 

This section should be filled in using the 'budget data of an administrative nature' to be firstly introduced in the Annex to the Legislative 
Financial Statement (Annex 5 to the Commission decision on the internal rules for the implementation of the Commission section of the general 
budget of the European Union), which is uploaded to DECIDE for interservice consultation purposes. 

EUR million (to three decimal places) 

DG:ECFIN 

 Human resources  
 Other administrative expenditure  

TOTAL DG ECFIN 

Appropriations  

Year 
2024 

Year 
2025 

Year 
2026 

Year 
2027 

TOTAL 

1.424 

0.005 

1.429 

1.424 

0.005 

1.429 

1.424 

1.424 

0.005 

0.005 

1.429 

1.429 

5.696 

0.020 

5.716 

TOTAL appropriations 
under HEADING 7 
of the multiannual financial framework  

(Total  commitments  = 
Total payments) 

1.429 

1.429 

1.429 

1.429 

5.716 

Year 
2024 

Year 
2025 

Year 
2026 

Year 
2027 

TOTAL 

EUR million (to three decimal places) 

TOTAL appropriations  
under HEADINGS 1 to 7 
of the multiannual financial framework  

Commitments 

91.429 

1.429 

1.429 

1.429 

95.716 

Payments 

91.429 

1.429 

1.429 

1.429 

95.716 

EN 

30 

EN 

 
 
 
 
 
 
 
 
 
 
 
– 

3.2.2. Estimated output funded with operational appropriations  

Commitment appropriations in EUR million (to three decimal places) 

Year 2024 

Year 2025 

Year 2026 

Year 2027 

TOTAL 

Type18 

Number  Cost  Number  Cost  Number 

Cost 

Number 

Cost 

Total 
number 

Total cost 

   Indicate 
objectives 
and outputs  

 

- Output 1 

Provisioning of the 
External Action 
Guarantee 

1 

90 

- Output 2 

Ex-post evaluation 

Subtotal for specific objective No 1 

TOTAL COST 

1 

1 

90 

90 

- 

- 

- 

- 

- 

- 

- 

- 

1 

1 

1 

90 

90 

90 

18 

Outputs are products and services to be supplied (e.g.: number of student exchanges financed, number of km of roads built, etc.).   

EN 

31 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
– 

3.2.3. Summary of estimated impact on administrative appropriations  

X  The  proposal/initiative  does  not  require  the  use  of  appropriations  of  an 

administrative nature  

 The  proposal/initiative  requires  the  use  of  appropriations  of  an  administrative 

nature, as explained below: 

EUR million (to three decimal places) 

Year 
2024 

Year 
2025 

Year 
2026 

Year 
2027 

TOTAL 

HEADING 7 
of the multiannual 
financial framework 

Human resources  

1.424 

1.424 

1.424 

1.424 

5.696 

0.005 

0.005 

0.005 

0.005 

0.020 

1.429 

1.429 

1.429 

1.429 

5.716 

Other administrative 
expenditure  

Subtotal HEADING 7 
of the multiannual 
financial framework  

Outside HEADING 7
of the multiannual 
financial framework  

19 

Human resources  

Other expenditure  
of an administrative 
nature 

Subtotal  
outside HEADING 7 
of the multiannual 
financial framework  

TOTAL 

1.429 

1.429 

1.429 

1.429 

5.716 

The  appropriations  required  for  human  resources  and  other  expenditure  of  an  administrative  nature  will  be  met  by 
appropriations from the DG that are already  assigned to management of the action and/or have been redeployed within the 
DG,  together  if  necessary  with  any  additional  allocation  which  may  be  granted  to  the  managing  DG  under  the  annual 
allocation procedure and in the light of budgetary constraints. 

19 

Technical  and/or  administrative  assistance  and  expenditure  in  support  of  the  implementation  of  EU programmes 
and/or actions (former ‘BA’ lines), indirect research, direct research. 

EN 

32 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
– 

3.2.3.1. 

Estimated requirements of human resources  

 The proposal/initiative does not require the use of human resources.  

 The proposal/initiative requires the use of human resources, as explained below: 

Estimate to be expressed in full time equivalent units 

20 01 02 01 (Headquarters and Commission’s Representation 
Offices) 

20 01 02 03 (Delegations) 

01 01 01 01  (Indirect research) 

 01 01 01 11 (Direct research) 

Other budget lines (specify) 

20 02 01 (AC, END, INT from the ‘global envelope’) 

20 02 03 (AC, AL, END, INT and JPD in the delegations) 

XX 01  xx yy zz  

20

- at Headquarters 

- in Delegations  

01 01 01 02 (AC, END, INT - Indirect research) 

 01 01 01 12 (AC, END, INT - Direct research) 

Other budget lines (specify) 

TOTAL 

XX is the policy area or budget title concerned. 

Year 
2024 

8 

Year 
2025 

8 

Year 
2026 

8 

Year 
2027 

8 

8 

8 

8 

8 

The human resources required will be met by staff from the DG who are already assigned to management of the 
action  and/or  have  been  redeployed  within  the  DG,  together  if  necessary  with  any  additional  allocation  which 
may  be  granted  to  the  managing  DG  under  the  annual  allocation  procedure  and  in  the  light  of  budgetary 
constraints. 

20 

Sub-ceiling for external staff covered by operational appropriations (former ‘BA’ lines). 

EN 

33 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Description of tasks to be carried out: 

Officials and temporary staff 

External staff 

Director  Dir.  D:  Supervise  and  manage  the  operation,  liaise  with  Council  and 
Parliament for the adoption of the Decision and the approval of the Memorandum of 
Understanding  (MoU),  negotiate  the  MoU  with  the  authorities  of  Egypt,  review 
reports,  lead  missions  and  assess  progress  with  the  implementation  of  reform 
measures. 

HoU/DHoU  Dir.  D:  Assist  the  Director  in  managing  the  operation,  liaising  with 
Council and Parliament for the adoption of the Decision and the approval of the MoU, 
negotiating with the authorities of Egypt the MoU and Loan Agreement (together with 
DG BUDGET), reviewing reports and assessing progress with  the implementation of 
reform measures.  

Desk economists, MFA Sector (Dir. D): Prepare the Decision and MoU, liaise with the 
authorities  and  the  IFIs,  conduct  review  missions,  prepare  Commission  staff  reports 
and  Commission  procedures  related  to  the  management  of  the  assistance,  liaise  with 
external experts for the operational assessment and the ex-post evaluation.  

5 AD, 1 AST will be covered with staff currently working on MFA activities and with 
desk economists currently working on Egypt. However, the overall workload of MFA 
activities  will  increase  particularly  to  support  the  set  up  and  management  of  a 
structured  cooperation  mechanism  and  to  develop  methodologies  and  tools  for 
monitoring the implementation of reforms linked to MFA assistance. For this reason, 1 
additional AD and 1 additional AST posts are required. 

DG BUDGET: Prepare the Loan Agreement, negotiate it with the authorities of Egypt 
and  have  it  approved  by  the  responsible  Commission  services  and  signed  by  both 
parties.  Follow  up  the  entry  into  force  of  the  Loan  Agreement.  Prepare  the 
Commission decision(s) on the borrowing transaction(s), follow up the submission of 
the  Request(s)  for  Funds,  select  the  banks,  prepare  and  execute  the  funding 
transaction(s) and disburse the funds to the country. Carry out the back-office activities 
to  follow  up  the  reimbursement  of  the  loan(s).  Prepare  the  corresponding  reports  on 
these activities. 

EN 

34 

  EN 

 
 
– 

3.2.4. Compatibility with the current multiannual financial framework  

The proposal/initiative: 

X  can  be  fully  financed  through  redeployment  within  the  relevant  heading  of  the  Multiannual 

Financial Framework (MFF). 

Explain  what  reprogramming  is  required,  specifying  the  budget  lines  concerned  and  the  corresponding  amounts. 
Please provide an excel table in the case of major reprogramming. 

 requires use of the unallocated margin under the relevant heading of the MFF and/or use of 

the special instruments as defined in the MFF Regulation. 

Explain what is required, specifying the headings and budget lines concerned, the corresponding amounts, and the 
instruments proposed to be used. 

 requires a revision of the MFF. 

Explain what is required, specifying the headings and budget lines concerned and the corresponding amounts. 

– 

3.2.5. Third-party contributions  

The proposal/initiative: 

X  does not provide for co-financing by third parties 

 provides for the co-financing by third parties estimated below: 

Appropriations in EUR million (to three decimal places) 

Year 
N21 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as necessary 
to show the duration of the 
impact (see point 1.6) 

Total 

Specify  the  co-financing 
body  

TOTAL appropriations 
co-financed  

21 

Year N is the year in which implementation of the proposal/initiative starts. Please replace "N" by the expected first 
year of implementation (for instance: 2021). The same for the following years. 

EN 

35 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
– 

3.3.  Estimated impact on revenue  

X  The proposal/initiative has no financial impact on revenue. 

 The proposal/initiative has the following financial impact: 

•   

on own resources  

•   

on other revenue 

• 

please indicate, if the revenue is assigned to expenditure lines  

Appropriations 
available for 
the current 
financial year 

Budget revenue line: 

Article …………. 

     EUR million (to three decimal places) 

Impact of the proposal/initiative22 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as necessary to show 
the duration of the impact (see point 1.6) 

For assigned revenue, specify the budget expenditure line(s) affected. 

Other remarks (e.g. method/formula used for calculating the impact on revenue or any other information). 

22 

As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net amounts, i.e. 
gross amounts after deduction of 20 % for collection costs. 

EN 

36 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 
to the LEGISLATIVE FINANCIAL STATEMENT 

Proposal for a Decision of the Council  

On providing macro-financial assistance to Egypt 

1. 

2. 

3. 

4. 

4.1. 

4.2. 

NUMBER and COST of HUMAN RESOURCES CONSIDERED NECESSARY 

COST of OTHER ADMINISTRATIVE EXPENDITURE 

TOTAL ADMINISTRATIVE COSTS 

METHODS of CALCULATION USED for ESTIMATING COSTS 

Human resources 

Other administrative expenditure 

This  annex  must  accompany  the  legislative  financial  statement  when  the  inter-services  consultation  is 
launched. 

The data tables are used as a source for the tables contained in the legislative financial statement. They 
are strictly for internal use within the Commission. 

EN 

37 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
1. 

Cost of human resources considered necessary 

 The proposal/initiative does not require the use of human resources 
X  The proposal/initiative requires the use of human resources, as explained below: 

The human resources required will be met by staff from the DG who are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with any additional 
allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints. 

EUR million (to three decimal places) 

HEADING 7 

of the multiannual 
financial 
framework 

Year 2024 

Year 2025 

Year 2026 

Year 2027 

- 

- 

- 

TOTAL 

FTE 

Appropriations 

FTE 

Appropriations 

FTE 

Appropriations 

FTE 

Appropriations 

FTE 

Appropriations 

FTE 

Appropriations 

FTE 

Appropriations 

FTE 

Appropriations 

 Establishment plan posts (officials and temporary staff) 

20  01  02  01  - 
Headquarters 
and 
Representation 
offices 

AD 

AST 

6 

2 

1.068 

0.356 

6 

2 

1.068 

0.356 

6 

2 

1.068 

0.356 

6 

2 

1.068 

0.356 

24 

4.272 

8 

1.424 

20  01  02  03  - 
Union 
Delegations 

AD 

AST 

 External staff 23 

20  02  01  and 
20  02  02  – 
External 
personnel 
Headquarters 
and 

– 

AC 

END 

INT 

23 

AC = Contract Staff; AL = Local Staff; END = Seconded National Expert; INT= agency staff; JPD= Junior Professionals in Delegations. 

EN 

38 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
AC 

AL  

END 

INT 

JPD 

Representation 
offices 

20  02  03  – 
External 
personnel 
Union 
Delegations 

- 

Other 
HR 
related  budget 
lines (specify) 

Subtotal HR 
– HEADING 
7 

8 

1.424 

8 

1.424 

8 

1.424 

8 

1.424 

24 

5.696 

The human resources required will be met by staff from the DG who are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with any additional 
allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints. 

EUR million (to three decimal places) 

Outside HEADING 7 

Year N24 

Year N+1 

Year N+2 

Year N+3 

Year N+4 

Year N+5 

Year N+7 

TOTAL 

of the multiannual financial 
framework 

FTE 

Appropriations 

FTE 

Appropriations 

FTE 

Appropriations 

FTE 

Appropriations 

FTE 

Appropriations 

FTE 

Appropriations 

FTE 

Appropriations 

FTE 

Appropriations 

 Establishment plan posts (officials and temporary staff) 

01 
01 
Research25 

01 

01 

Indirect 

AD 

01 01 01 11 Direct Research 

AST 

24 

25 

Year N is the year in which implementation of the proposal/initiative starts. Please replace "N" by the expected first year of implementation (for instance: 2021). The same for the 
following years. 
Please choose the relevant budget line, or specify another if necessary; in case more budget lines are concerned, staff should be differentiated by each budget line concerned. 

EN 

39 

EN 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
Other (please specify) 
 External staff 26 

External  staff 
from 
operational 
appropriations 
(former 
‘BA’ 
lines). 

- 
at 
Headquarters 

in  Union 

- 
delegations 

AC 

END 

INT 

AC 

AL  

END 

INT 

JPD 

01 01 01 02 Indirect Research 

AC 

01 01 01 12 Direct research 
Other (please specify)27 

END 

INT 

Other budget lines HR related 
(specify) 

Subtotal HR – Outside 
HEADING 7 

Total HR (all MFF 
Headings) 

The human resources required will be met by staff from the DG who are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with 
any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints. 

26 
27 

AC = Contract Staff; AL = Local Staff; END = Seconded National Expert; INT= agency staff; JPD= Junior Professionals in Delegations. 
Please choose the relevant budget line, or specify another if necessary; in case more budget lines are concerned, staff should be differentiated by each budget line concerned. 

EN 

40 

EN 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2. 

Cost of other administrative expenditure 

 The proposal/initiative does not require the use of administrative appropriations 

 The proposal/initiative requires the use of administrative appropriations, as explained below: 

EUR million (to three decimal places) 

HEADING 7 

of the multiannual financial framework 

At headquarters or within EU territory: 

2024 

2025 

2026 

2027 

- 

- 

- 

Total 

20 02 06 01 - Mission and representation expenses 

 0.005 

 0.005  

 0.005 

 0.005  

 0.020 

20 02 06 02 - Conference and meeting costs 
20 02 06 03 - Committees28 

20 02 06 04 Studies and consultations 

20 04 – IT expenditure (corporate)29  

Other  budget 
necessary) 

lines  non-HR  related  (specify  where 

In Union delegations 

20 02 07 01  - Missions, conferences and representation 
expenses 

20 02 07 02 - Further training of staff 

20 03 05 – Infrastructure and logistics 

Other  budget 
necessary) 

lines  non-HR  related  (specify  where 

28 
29 

Specify the type of committee and the group to which it belongs. 
The opinion of DG DIGIT – IT Investments Team is required (see the Guidelines on Financing of IT, C(2020)6126 final of 10.9.2020, page 7). 

EN 

41 

EN 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
Subtotal Other - HEADING 7 

of the multiannual financial framework 

Outside HEADING 7  

of the multiannual financial framework 

Expenditure  on  technical  and  administrative  assistance 
(not 
from  operational 
including  external 
appropriations (former 'BA' lines): 

staff) 

- at Headquarters 

- in Union delegations 

Other management expenditure for research 

Policy IT expenditure on operational programmes30  

Corporate IT expenditure on operational programmes31 

Other  budget 
necessary) 

lines  non-HR  related  (specify  where 

Sub-total Other – Outside HEADING 7 

of the multiannual financial framework 

Total Other admin expenditure (all MFF 
Headings) 

 0.005 

 0.005  

 0.005 

 0.005  

 0.020 

2024 

2025 

2026 

2027 

- 

- 

- 

Total 

EUR million (to three decimal places) 

 0.005 

 0.005  

 0.005 

 0.005  

 0.020 

30 
31 

The opinion of DG DIGIT – IT Investments Team is required (see the Guidelines on Financing of IT, C(2020)6126 final of 10.9.2020, page 7). 
This item includes local administrative systems and contributions to the co-financing of corporate IT systems (see the Guidelines on Financing of IT, C(2020)6126 final of 
10.9.2020). 

EN 

42 

EN 

 
 
  
  
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
EN 

43 

EN 

 
 
 
 
3. 

Total administrative costs (all Headings MFF) 

EUR million (to three decimal places) 

Summary 

2024 

2025 

2026 

2027 

- 

- 

- 

Heading 7 - Human Resources 

Heading 7 – Other administrative expenditure 

Sub-total Heading 7 

Outside Heading 7 – Human Resources 

Outside Heading 7 – Other administrative expenditure 

Sub-total Other Headings 

TOTAL 

HEADING 7 and Outside HEADING 7 

1,424 

 0.005 

1.429 

1,424 

 0.005  

1.429 

1,424 

 0.005 

1,424 

1,424 

 0.005  

1,424 

1.429 

1.429 

1,424 

1,424 

Total 

5.696 

0.020  

5.716 

5.706 

The administrative appropriations required will be met by the appropriations which are already assigned to management of the  action and/or which have been redeployed, together if 
necessary with any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of existing budgetary constraints. 

EN 

44 

EN 

 
 
 
 
 
 
  
  
  
 
  
  
  
  
  
  
  
  
  
  
 
 
  
  
  
  
  
  
 
 
  
  
  
  
  
  
 
  
  
 
 
4. 

Methods of calculation used to estimate costs 

4.1. 

Human resources 

This part sets out the method of calculation used to estimate the human resources considered necessary 
(workload assumptions, including specific jobs (Sysper 2 work profiles), staff categories and the corresponding 
average costs) 

HEADING 7 of the multiannual financial framework 

NB: The average costs for each category of staff at Headquarters are available on BUDGpedia: 
https://myintracomm.ec.europa.eu/corp/budget/financial-rules/budget-implementation/Pages/financial-statement.aspx 

 Officials and temporary staff 

 External staff 

Outside HEADING 7 of the multiannual financial framework 

 Only posts financed from the research budget  

 External staff 

4.2. 

Other administrative expenditure 

Give details of the method of calculation used for each budget line  

and in particular the underlying assumptions (e.g. number of meetings per year, average costs, etc.) 

HEADING 7 of the multiannual financial framework 

Mission costs relate to reviews in the beneficiary country, with the aim of assessing the progress made by the 
beneficiary country on the attached MFA conditionalities.  

EN 

45 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outside HEADING 7 of the multiannual financial framework 

EN 

46 

  EN