EU approves 5.0 bn euro financial aid package to Egypt

The European Union has approved a 5.0 billion euro ($6.4 billion) financial aid package to Egypt after its economy was battered by a 2011 uprising that toppled Hosni Mubarak, the EU and Egypt said on Wednesday. EU foreign policy chief Catherine Ashton told a press conference in Cairo the Europeans would "provide additional loans and grants worth about 5 billion euros." "We did not just come with promises, but with real commitments," she said, after meeting President Mohamed Morsi. EU special representative for the southern Mediterranean Bernardino Leon said most of the money will finance Egyptian development programmes over the next two years. Two hundred million euros will be "immediately available" for budget support, he said. The European Investment Bank will grant Egypt 2.0 billion euros and the European Bank for Reconstruction and Development a further 2.0 billion euros, while EU countries will come up with 1.0 billion euros, the presidency said. The presidency described the package as "a strong sign of the EU's support for Egypt's path to development." Ashton, who attended a meeting of EU and Arab foreign ministers on Tuesday, is also participating in the EU-Egypt task force which aims at bolstering economic relations between Egypt and Europe. Representatives of around 100 large European companies and members of the European Commission and European MPs are participating in the meetings, which wrap up later on Wednesday. Egyptian Finance Minister Mumtaz Said said last week that Egypt may reach a loan deal with the International Monetary Fund next month for $4.5 billion, instead of the $4.8 that Cairo had hoped for. Following a visit by IMF Managing Director Christine Lagarde in August, officials started working on a proposed plan to support the economy, which has been beset by serious difficulties since the 2011 uprising. Political instability has badly affected Egypt's major revenue earner, tourism, and has led to a drop in foreign investments, worsened the budget deficit and sparked social conflict. The central bank's currency reserves plunged, threatening Egypt's ability to import commodities and support the Egyptian pound.