Egypt continues a process of political transition. The country has undergone dramatic political changes since the 2011 revolution that toppled the regime of former President Hosni Mubarak. In June 2012, elections were held and Mohamed Morsi won 51.7 percent of the vote. He took office on June 30, 2012, and a new constitution was passed in a referendum in December 2012. After mass demonstrations and the removal of President Morsi on July 2, 2013, an interim president was sworn in on July 4 and a Constitutional Declaration was issued on July 9. An interim government was formed on July 16, 2013. A body appointed by Egypt's interim government to rewrite the country's constitution met for the first time on September 8, 2013. After a referendum on a new constitution, the country is scheduled to head to presidential and parliamentary elections in early 2014.
Economic growth remains weak, with a high fiscal deficit and gross public debt (domestic and external) rising to nearly 100 percent of GDP at end-June 2013. Low growth rates pose a danger to mounting social frustrations, as they will not suffice to deliver the needed jobs and opportunities. Unemployment rate reached over 13 percent in June 2013. Most critically, however, more than three-quarters of the unemployed are between 15 and 29 years of age.
Updated: September 2013
The Bank has aligned its strategy with the changing realities and priorities in Egypt.
Interim Strategy Note (ISN): The Bank’s Board of Directors endorsed an ISN in June 2012 with three pillars that will guide Bank operations in Egypt through December 2013:
(i) Improving economic management through control of the fiscal deficit and initiating reforms to enhance transparency in government operations;
(ii) Creating opportunities for short-term, productive job-creation, particularly for women and young people, and initiating steps to improve the environment for longer-term private sector job creation;
(iii) Fostering approaches that will broaden access to and greater participation in the delivery of economic and social services for disadvantaged groups, again with special attention paid to women and young people, and to lagging regions of the country.
Egypt is eligible for lending from the International Bank for Reconstruction and Development (IBRD). The Bank’s current portfolio includes 21 projects from the IBRD for a total commitment of US$4.6 billion. The focus of these projects is in line with the three pillars of the ISN:
Economic Management: The Bank is supporting the preparation of important legislation on economic governance, through the review and rating of draft legislation (including Access to Information Legislation); benchmarking against international good practice; preparing and sharing of policy and guidance notes; and the organization of international workshops.
Private Sector Confidence: Bank has prepared several flagship reports: The Financial Development and Inclusive Growth: Attaining Shared and Sustainable Prosperity in Egypt (2013); Doing Business Report (2013); the Private Sector MENA Flagship, From Privilege to Competition: Unlocking Private-Led Growth in MENA (2010); The Rapid Assessment Enterprises Survey (2012), which have been widely disseminated to stakeholders. The World Bank’s Egypt Enhancing Accessto Finance for Micro and Small Enterprises Project is the first project in the MENA Region that comprehensively addresses the development of the MSE sector.
Infrastructure Services: The Helwan South project is financing a critical steam technology power plant, fired by natural gas as the primary fuel. In parallel, a separate technical assistance and advisory services program is designed to enhance the sustainability of the power sector. The project will significantly contribute to the provision of reliable and uninterruptable electricity supply service that is vital for Egypt’s economic growth and security during this period of political transition.
Reforming Social Safety Net System (SSN): The Bank has been supporting the government in providing the analytical bases for consolidating and improving the targeting of the SSN. It has responded by bringing global expertise in helping find practical solutions to major challenges. The Bank is also supporting the government in meeting the urgent needs of the poor while laying the foundations for an efficient SSN system, including building the unified database of the poor and putting in place adequate institutional and implementation mechanisms.
Social Health Insurance: The ongoing Social Health Insurance Systems Development project will cover the cost of premiums for eligible beneficiaries of the social assistance pension and cash transfer programs based on verification for the first year of enrollment. It will also cover the cost of establishing and developing health insurance functions, support the cost of external audits, project management, quality assurance, verification of enrollment, communication, monitoring, and impact evaluation.
Updated: September 2013
Enhancing Access to Finance for Micro and Small Enterprises (MSE) Projects: A total of 77, 818 loans have been disbursed to MSEs leading to the creation of over 111 thousand job opportunities. More importantly, youth, a severely underserved segment suffering from disproportionately high unemployment rates, have been effectively targeted, with beneficiaries between the age of 21 to 35 and representing 60 percent of all microfinance lending during the period of January 2011 and June 2013. The strong impact the operation has had on gender mainstreaming is evident in the increase in the number of female-owned MSEs from 4,573 to 20,536 from June 2012 to June 2013, which represents 25 percent of all financed projects. In light of regional disparities, the project allocated approximately 40 percent of the value of disbursed micro loans and 30 percent of small loans to previously underserved governorates.
Affordable Mortgage Finance Project: By June 2013, 8,430 mortgage linked subsidies had been disbursed, and the supply of new units in the affordable range is expected to pick up. The government will build 75,000 new units of 75 m² for a sales price of EGP 100,000. The legal, regulatory, and institutional framework for the Mortgage Finance Subsidies Program was strengthened, and the institutional framework to enhance transparency is in place.
Natural Gas Connections Project: Through this project, the gas distribution network was extended to 478,654 customers, external installation completed for 415,783 customers, internal installation completed for 390,902 customers, and conversion to piped gas completed for 358,862 customers.