Overview

The political transition process initiated in June 2013 came to an end with the election of the House of Representatives in December 2015. The economy started to recover in 2014/15, as the government scaled up infrastructure spending and undertook important measures to restore macroeconomic stability by moving away from universal subsidies towards a more targeted transfer program, taking measures to contain the wage bill and increasing tax revenues.  

As such, growth rebounded to 4.2 percent in 2014/15, double the growth during the previous four years. Preliminary figures for the first quarter of 2015/16 indicate that the economic uptick has faded somewhat, mainly due to the foreign exchange shortages that stifled production, and undermined Egypt’s competitiveness.

The Central Bank of Egypt has thus moved towards a more flexible exchange rate management regime in mid-March 2016; alleviating pressures on the external accounts and partially resolving a binding constraint on economic activity. Financial soundness indicators point to the continued resilience of the banking sector, and the government is making efforts to deepen financial inclusion. Nevertheless, continued fiscal and economic reforms are needed to sustain growth.
 
Egypt has also made significant strides in human development indicators: child mortality, life expectancy, primary and secondary school enrollment, and literacy rates have improved dramatically in the past thirty years.  Here too, however, governance issues continue to affect health and learning outcomes. To protect the poor, the government has targeted 1.5 million households in a new cash transfer program.
 
Far-reaching structural reforms are needed to transform Egypt’s economy into a dynamic system that can reduce poverty, create productive employment opportunities, and maintain social and political stability.  Economic growth in the past three decades has been moderate and uneven, and insufficient to reduce poverty or absorb the rapidly growing supply of labor.  Poverty rates have been persistently high, at about one-quarter of the population, concentrated in Rural Upper Egypt, and unemployment remains high, particularly for women and youth.  At the same time, the fiscal deficit is still large, reserves are only at about 3 months of imports, and political and social risks remain because their underlying causes – shortage of formal sector jobs, high unemployment and underemployment among Egyptian youth, and exclusion of poor segments of the population – persist.
 
A recent rebound in the population growth rate combined with the echo boom from the last population bulge has resulted in a second youth bulge nearly 50 percent larger than the first.  This will increase pressures on the labor market, infrastructure, social services, and the environment, making it even more urgent for Egypt to undertake wide-ranging structural and policy reforms.

Last Updated: Apr 01, 2016

The new Egypt Country Partnership Framework (CPF) for Egypt was approved on December 17, 2015. Prepared jointly by IBRD, IFC and MIGA, informed by consultations with a broad range of stakeholders, and underpinned by a Systematic Country Diagnostic, the CPF will guide WBG engagement in Egypt during the period FY15-FY19. 

Scaling up support for the country in a critical period of economic and social transformation, it will focus on Egypt’s urgent need to create more jobs, especially for the youth, improve quality and inclusiveness in service delivery, and promote more effective protection of the poor and the vulnerable.

Under the WBG twin goals of ending extreme poverty and promoting shared prosperity, the CPF is structured around three interconnected focus areas: (i) improving governance; (ii) enhancing private sector job creation; and (iii) improving social inclusion.

Last Updated: Apr 01, 2016

Access to Finance for Micro and Small Enterprises:
Channeled through the Social Fund for Development (SFD) and on-lent to eligible financial intermediaries, the lines of credit have reached more than 118,000 beneficiaries, 32% of which are women, and 40% are youth. This led to the creation of 223,905 job opportunities by the end of December 2015. In addition to a special focus on youth and women, as well as underserved regions, innovative financing mechanisms are being promoted, including venture capital mechanisms.

Labor Intensive Public Works Program:
The projects have reached more than 127,000 beneficiaries, of which 44% are female, 72% come from Upper Egypt, and 76% are youth. More than 21 million days of work have been offered. A multi-sector team provided technical advice to the government on subsidy reform and cash transfers and supported the design a targeted cash transfer program.

Strengthening Social Safety Net Project
The project has helped launch the cash transfer programs Takaful and Karama in April 2015 in Egypt’s most lagging regions. So far, more than 720,000 households have applied/registered to the program and more than 300,000 beneficiary eligible households have received cash payments.
 
Energy projects:
The fast track power generation program (2,100MW) was one of the main drivers for bringing installed capacity to a total of 29,000 MW. From FY06 to FY13, the World Bank supported four gas-fired generation plants (El Tebbin, Ain Sokhna, Giza North and Helwan South) and supported a program of renewables. A natural gas project has connected more than 365,637 households representing 15% of connected households in Cairo and Giza governorates. More than 90,000 low income households have been connected to the gas distribution network and more than 3,000 jobs were created, mainly in network installation and maintenance.

Water, Sanitation and Irrigation:
Improved irrigation and drainage services were provided to over 300,000 farmers. 1,465 water user associations (WUAs) were established and Egypt’s first waste water PPP was successfully completed in cooperation with IFC. The bank has also been supporting the Sanitation sector through the Integrated Sanitation and Sewerage Infrastructure Project which closed in December 2015 benefiting 13,300 households. The Bank is currently implementing Integrated Sanitation and Sewerage Infrastructure Project which targets to benefit 55,000 households. Moreover, a large Program has been recently approved to increase access to improved sanitation services in Egypt’s rural communities. 167,000 households within the Delta are expected to be connected by 2020.

Investment support:
The Multilateral Investment Guarantee Agency reinsured the United States Overseas Private Investment Corporation’s coverage of Apache Corporation’s investments in its subsidiaries in Egypt.

Last Updated: Apr 01, 2016


LENDING

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

*Amounts include IBRD and IDA commitments