EU may lend Egypt 500m euros to complement IMF loan: EU official

Macro-financial assistance' would carry similar conditions as mooted IMF loan and follow an 18-month time frame, finance official tells Ahram Online

The European Union (EU) is considering lending Egypt up to 500 million euros ($660 million), dependent on the country signing a much-delayed loan with the International Monetary Fund (IMF), an EU finance official has revealed.

"The EU has received a request from Egypt for financial assistance," Heliodoro Temprano Arroyo, head of the European Commission's macro-financial assistance unit, told Ahram Online in answer to a question at a conference in Cairo on Tuesday.

Arroyo said that the EU is considering providing Egypt with around 500 million euros, in the form of "macro-financial assistance" (MFA) aimed at long-term economic development.

MFA is a policy-based financial instrument extended by the EU to non-member countries. It takes the form of medium/long-term loans or grants, aimed at complementing finance provided by an IMF programme.

This means such EU assistance would be dependent on Egypt accepting an IMF loan, and would carry similar conditions for spending and an 18-month loan period, Arroyo said.

"We will be working closely with the IMF to complement their economic adjustment programme for Egypt," Arroyo said. "This includes prudent public finance management, labour and tax reforms among other things."

On Sunday, Egypt's finance minister said the country expects to sign a $3.2 billion loan agreement with the IMF next month and will receive one-third of the funds immediately upon signing. The government turned down a similar loan from the IMF last June.

The EU will make a final decision on the loans by the middle of 2012, Arroyo said.

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