Following up on the request Egyptian President Mohammed Morsi made in mid-September, on Wednesday the European Union approved a $6.4 billion (5 billion euro) aid package for Egypt.
Morsi said in a statement that the deal is "a strong sign of the EU's support for Egypt's path to development."
Two billion euros will come from the European Investment bank, and another two billion from the European Bank for Reconstruction and Development, the BBC said. The rest will be provided by EU member states.
The announcement was made during a summit in Cairo between Egyptian diplomats and European businesspeople to discuss objectives for Egypt's economic future, Daily News Egypt reported.
“We assure you that Egypt respects all existent stable contracts, as long as they’re corruption-free,” Minister of Industry and Foreign Trade Hatem Saleh firmly declared in his opening remarkds. “Egypt is undergoing democratic transformation and, as opposed to the pre-revolution circumstances, we guarantee you that we operate in full transparency and we will make sure that all our obligations and contractual agreements are respected."
Egypt also applied for a $4.8 billion loan from the International Monetary fund to help fill its $28 billion budget deficit, the BBC reported. However on Tuesday seventeen Egyptian groups, including two Islamist organizations, sent a letter the the head of the IMF and the Prime Minister Ahmed Shafik, rejecting the proposed loan, despite Egypt's dangerously low coffers (hovering just under $15.5 billion), the AP said.
Egypt's economic growth dropped steeply after the ousting of former President Hosni Mubarak, having lost much of its tourism industry, and therefore foreign investments, to the threat of violence and political instability. The World Bank reports that 40 percent of Egypt's 83 million people live on less than $2/day, and inflation is at around 4.6 percent. The Prime Minister's proposed overhaul of the public subsidy program has been controversial and unpopular, while the country's infrastructure is crumbling.
It is unclear for what, exactly, the aid from the EU will be used, but Europe seems keen to invest. At the business summit in Cairo, Tamsyn Barton, the European Investment Bank's Director General for External Operations announced the Bank would be doubling its annual investment to $1 billion, and announced she will be signing onto a 600 million euro infrastructure project. Anna Catte, the Joint Managing Authority of the European Neighborhood and Partnership Instrument, also told the summit she had approved 114 million euros worth of new projects in Egypt.
The apparent eagerness to invest by the Europeans was met by a determination on the Egyptian side to prove that the investments will be worth it. “The message that Egypt needs to send to the outside world is that it is capable of protecting foreign investment," said Evangelos Dairetzi, the Greek Counsellor for Economic and Commercial Affairs, to Daily News Egypt. "Egypt, just like Greece, is socially flexible; it has a long history and has been through many changes, but Egyptians still adapt. This is why I am very optimistic that Egypt will survive the current stumbling blocks."