Overview

  • In 2014, the Government started implementing a bold and transformational reform program, aimed at spurring the economy, enhancing the country’s business environment, and setting the stage for balanced and inclusive growth. The first wave of reforms focused on rebalancing the macroeconomy, including passage of the VAT Law, reducing energy subsides, containing the wage bill, and the liberalization of the Egyptian Pound. The second wave of reforms focused on improved governance and the investment climate, including the Civil Service Reform Law passed in October 2016 and policies to remove investment barriers and attract local and foreign investments. 

    The implementation of reforms along with the gradual restoration of confidence and stability are starting to yield positive results.  In fiscal year 2018, real GDP grew at 5.3%, compared to 4.2% in FY17. The economic pickup is driven by public investments, private consumption, and exports of goods and services (such as oil and tourism); and dynamism is seen in the tourism, gas, ICT/telecom and construction sectors. Meanwhile, inflation continued to ease, despite upward pressure from decreased subsidies and subsequent increases in energy costs and transport fares. Headline inflation slowed to an annual 13.5 % in July 2018 from a record high of 33 % a year ago. Similarly, core inflation fell to single digits for the first time in more than two years. Foreign exchange reserves continued to improve and reached 44.3 billion in end-July 2018. 

    To alleviate the adverse effects of the economic reforms on the poor and vulnerable and increase investments in Egypt’s human capital, the government has scaled up key social protection short-term mitigating measures, including through higher allocations of food smart cards and targeted conditional and unconditional cash transfer programs. To effectively integrate human development in the social protection measures, the conditionality of the cash transfer programs is related to health and education. The country’s social protection measures are shifting from generalized energy and food subsidies to more poverty and human development targeted programs. 

    Last Updated: Oct 11, 2018

  • The Arab Republic of Egypt is one of the founding countries of the World Bank and its third largest shareholder in the Middle East and North Africa region. It is also an important client of the Bank, which began its support of Egypt’s development program in 1959 with the Suez Canal Development Project. 

    The World Bank Group’s current engagement is guided by the Egypt Country Partnership Framework 2015–19, informed by a rigorous analysis of key constraints to poverty reduction and shared prosperity and by extensive consultations with the government, the private sector, academia, civil society organizations, and youth groups. Egypt, a lower middle-income country, is eligible for financial support from the IBRD, IFC, and MIGA.

    Developed at a critical juncture in Egypt’s history and in a regional context marked by volatility, fragility, and conflict, the 2015–19 framework focuses on fighting poverty and inequality. It emphasizes transformational policy, institutional and investment operations to help Egypt foster a more inclusive and sustainable growth model, create productive jobs, deliver quality services, and more effectively protect the poor and the vulnerable. The framework has three pillars:

    • Enhance governance by encouraging fiscal transparency and efficiency, promoting citizens’ engagement and feedback, and strengthening inclusive institutions.
    • Create private sector jobs by reforming the regulatory environment to foster private investment, boosting energy-generation and energy-efficiency capacities, enhancing the capacity of key transport infrastructure and services, broadening access to improved agriculture and irrigation services, and increasing access to finance for micro-, small- and medium-sized enterprises.
    • Promote social inclusion by increasing access to short-term income opportunities for the poor, strengthening the social safety net system, improving the quality of health care  services, promoting housing for low-income households, improving sanitation and sewage services in rural areas, expanding natural gas connections, and enhancing the quality of the education sector.

    The World Bank’s operations in Egypt are also in line with the World Bank’s recently launched ‘’Human Capital Project’’, which aims to: to build demand for more and better investments in people, help countries strengthen their human capital strategies and investments for rapid improvements in outcomes and improve how we measure human capital.  New operations were introduced in accordance to the ‘’Human Capital Project’’, including : 1) The  ‘’Transforming Egypt's Healthcare System Project’’ which aims to  expand the screening of Hepatitis C for around 35 million people and treat  an estimated 1.5 million patients, improve the quality of primary and secondary public health care services, and enhance demand for health and family planning services. 2) The Supporting Egypt Education Reform Project which focuses on expanding access to quality Kindergarten for around 500,000 children, training 500,000 teachers and education officials, while providing 1.5 million students and teachers with digital learning resources.

    Last Updated: Oct 11, 2018

  • FISCAL CONSOLIDATION, SUSTAINABLE ENERGY, & COMPETITIVENESS PROGRAMMATIC DEVELOPMENTPOLICY FINANCING

    The US$3.15 billion Development Policy Finance program, consisting of three operations over a period of three years (2015 -2017), has supported Egypt’s homegrown reforms program aimed at enhancing the economy, creating jobs, and achieving sustainable growth, especially in the energy sector.

    • Government revenues have been bolstered through the Income Tax Law (US$ million) (96 of 2015) to unify the top income tax rate at 22.5 percent to apply to all individuals and legal entities. 
    • Government expenditures have been brought under control, especially on wages and salaries (through annual budget instructions, and the automation of the salary payments) and energy subsidies through annual tariff adjustments for gas and electricity.
    • Long term clarity on policy and regulations has been enhanced through progressive laws on electricity and renewable energy that came in force in 2015, and the country moved from power deficits in 2014 to surpluses in 2015 and 2016 while energy subsidies were reduced from 6.6 percent of GDP in fiscal 2014 to around 3 percent in fiscal 2016.
    • The environment for investors is being strengthened by amending the Investment Law, the implementation of the Competition law, and the reform of the industrial licensing regime that is expected to reduce the time taken in providing licenses to low risk industries by 80%.

    The reforms paved the way for the government to Maximize Finance for Development, with integrated World Bank Group support. The DPF supported policy action in electricity tariff and subsidy management, as well as the introduction of a renewable energy law, while the International Finance Corporation helped design the landmark solar Feed-in-Tariff program to attract private investment in renewable energy, and led a consortium of nine international banks to invest $653 million in solar energy, with the Multilateral Investment Guarantee Agency providing $210 million in political risk insurance to enable the private investments. With the reform of energy subsidies, Egypt is saving US$14 billion annually, and a large proportion of these savings have been channeled to strengthening social safety nets that are better targeted to the segment of the population most in need.  

    STRENGTHENING SOCIAL SAFETY NETS PROJECT

    The project has helped launch the cash transfer programs Takaful and Karama in April 2015 in Egypt’s most under developed regions. To date 2,268,801 households (nearly 10 million individuals) have received cash transfers under the Takaful and Karama Program. 67% of them are below the poverty line and 88% are female-headed. The Takaful program conditionality requires beneficiaries to comply to the program’s health and education requirements. This program covers 27 governorates, 345 districts, 5,630 villages, and 2,636 social units.

    EMERGENCY LABOR INTENSIVE INVESTMENT PROJECT

    The project aims to create short-term employment opportunities for unemployed, unskilled and semi-skilled workers (12.3 million person/day of work) and to provide access to basic infrastructure services to the target population in poor areas of the country. As of 2017, twelve million person/days of work were created in community services and small-scale infrastructure subprojects. More than 120,800 direct jobs were created, of which 35 percent benefited women and 70 percent youth. Infrastructure works were completed, including the rehabilitation of schools, social units, youth centers, houses and small canals, upgrading of rural roads, and protection of Nile banks. Community services were delivered in several sectors, including education (literacy) and health and environmental promotion and awareness.

    HEALTH CARE QUALITY IMPROVEMENT PROJECT

    The project aimed to assist family health care facilities in Egypt’s poorest 1,000 villages meet national health care quality standards. As of 2017, out of the 1,317 family health care facilities identified for potential support under the project, 1,142 have submitted quality improvement and maintenance plans to the established committee. The verification for accreditation process was triggered, and 551 family health facilities were verified. Doctors have been contracted for most of the facilities that lacked physician-provided services.

    PROMOTING INNOVATION FOR INCLUSIVE FINANCIAL ACCESS PROJECT

    The project aims to expand access to finance for micro- and small enterprises in Egypt using innovative financing mechanisms, with a special focus on youth, women, and underserved regions. To date the project served a total of 156,185 beneficiaries; out of which, 41% are women (64,035) 32.5% are youth (50,760) and 30% are in lagging regions A venture capital department was created in the Social Fund for Development and three proposals have been approved.

    INCLUSIVE HOUSING PROGRAM

    This project aims to improve the affordability of formal housing for low-income households in the Arab Republic of Egypt and to strengthen the Social Housing Fund's capacity to design policies and coordinate programs in the social housing sector.  To date Nearly 120,000 households, almost 50% of which are in the bottom 20% of the income distribution, have accessed ownership or rental of a housing unit. Over 800,000 households are expected to own or rent a housing unit by the end of the Bank-financed program.

    Last Updated: Oct 11, 2018

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LENDING

Egypt: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


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Additional Resources

Country Office Contacts

Nile City Towers,
North Tower, 29th Floor,
2005C Corniche El-Nil, Ramlet Boulac,
Cairo, Egypt
+(202) 246 199 83/4/5
ewahby@worldbank.org