Overview

  • In 2014, the Government started implementing a bold and transformational reforms program, aimed at spurring the economy, enhancing the country’s business environment and staging a balanced and inclusive growth. The first wave of reforms package focused on rebalancing the macroeconomic aspects, which included difficult policy choices that were adopted simultaneously; such as the VAT Law, reducing energy subsides, containing the high growth of the wage bill and the liberation of the Egyptian Pound. The second wave of reforms targeted improving governance and investment climate, which includes the Civil Service Reform Law, that was passed in October 2016, in addition to a set of undergoing reforms targeting to removing investment barriers and attracting local and foreign investments, such as the Industrial Licensing Law, the Investment Law and the Company Law.
     
    The Government of Egypt’s reform program is widely endorsed by key Development Partners, including through the World Bank’s programmatic DPF series, the IMF Extended Fund Facility (EFF) and the African Development Bank parallel financing. The implementation of reforms along with the gradual restoration of confidence and stability are starting to yield positive results. The economy is gradually improving with the annual rates of GDP growth reaching 4.3 percent in 2015/2016, up from an average of only 2 percent during the period 2010/11-2013/14. The overall budget deficit declined in the first half of FY17 to 5.4 percent of GDP, down from 6.4 percent in the same period last year. Following the floatation of the local currency, the exchange rate has initially displayed some volatility, but has subsequently started to strengthen, notably with the strong foreign investor demand for local debt instruments.

    To alleviate the adverse effects of the economic reforms on the poor and vulnerable, the GoE has adopted a package of social protection/social safety net mitigating measures and intensified its effort to move away from inefficient and generalized subsidies to more efficient and better poverty targeted social safety nets.

    Measures include:

    • Scaling up the targeted Takaful and Karama cash transfer Program. The Takaful program is a cash transfer program made to poor mothers conditional on their children getting health exams and/or demonstrating school attendance.  Karama is a categorical cash transfer program for poor elderly people and those with disabilities. Initially rolled out in Upper Egypt with a target of 1.5 million households met in March 2017, the program has been expanded nationwide and scaled up to reach 1.7 million household beneficiaries by June 2017.
    • Expanding the social pension program, the school feeding program in Upper Egypt and the food subsidy program (?)

    In addition, the Government is committed to launch in the coming months the second phase of the Labor Intensive Works and Employability Program implemented by the Social Fund for Development in poor areas, and the Ministry of Social Solidarity is working on a new program for productive inclusion (Forsa) and a reform of the pension system while initiating the development of a comprehensive social protection framework. 

    Despite the Government’s current efforts, social conditions remain a concern; inflation caused by the currency floatation, energy subsidy reform and other food price shocks significantly affects the Egyptian households, especially the poor and the vulnerable segments of the population as well as the middle class. Unemployment continues to be high at 12.4 percent in the final quarter of the calendar year 2016, and rates are higher among youth and women. The sharp increases in (food) inflation is likely to limit poverty reduction and negative short-term effects could be felt across different income levels.

    Last Updated: Apr 01, 2017

  • The new 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 the WBG engagement in Egypt during the period of 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.

    This CPF presents an important departure from previous WBG strategies for Egypt. The CPF supports a transformative program to renew the social contract to support private sector job creation, social inclusion, and enhanced governance. The Bank intends to use a programmatic approach, including finance and knowledge, use analytic products strategically to underpin policy dialogue and project design, and deploy the WBG’s convening power to promote advocacy and reforms. Lending will rely more on Development Policy Financing (DPF) and Program for Results (PforRs) than in the past where the main instrument was investment loans, although investment loans will continue to be used where appropriate. Governance issues will be an integral part of all Bank Group initiatives, including policy and institutional reforms, and increasing transparency and accountability at the sector and project level; this will include enhancing citizens’ voice and grievance redress mechanisms.  The WBG will show greater selectivity in the use of IBRD resources in core public sectors with IFC leveraging the private sector.  The Bank and IFC will use a joint approach in energy, education, and competitiveness.  

    Egypt’s Second Fiscal Consolidation, Sustainable Energy, and Competitiveness Programmatic Development Policy Financing (DPF) was approved by the World Bank Board on December 20, 2016. The Program Development Objectives are to advance fiscal consolidation through higher revenue collection, greater moderation of the wage bill growth and stronger debt management; ensure sustainable energy supply through private sector engagement and enhance the business environment through investment laws, industrial license requirements as well as enhancing competition.

    Last Updated: Apr 01, 2017

  • 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 over 140,000 beneficiaries, 38% of which are women, and 40% are youth. In addition to a special focus on youth and women, as well as under-served regions, innovative financing mechanisms have been introduced in the Social Fund for Development including venture capital mechanisms.
     
    Labor Intensive Public Works Program:

    22.1 million days of work (person/day) benefiting more than 140,000 individuals of which 44% are female and 76% youth. The program rehabilitated 9,000 classrooms, 162 social units, 249 youth centers, 3,150 km of canals, 2,642 houses of poor families, 170 km of rural roads upgrading and protection of 72 km of Nile River Banks. Over 850,000 families received maternal and child healthcare visits from community health promoters and over 50,000 individuals benefited from literacy services. About 500 NGOs are implementing community service projects and about 700 Small contractors are benefiting.

    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. 1,513,038 households are beneficiary of the Takaful and Karama program, out of the overall target of 1.7 million households, increased from 1.5 million initially. 90 percent of the card holders are women in accordance with the program’s design. 
     
    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 the Second Integrated Sanitation and Sewerage Infrastructure Project which targets to benefit 57,000 households. Moreover, a large Rural Sanitation Program-for-Results 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.

    Upper Egypt Local Development Program (UELDP):

    The UELDP $500M PfroR was approved in September 2016 and declared effective in March 2017. The Program aims to create sustainable economic opportunities and jobs in Qena and Sohag by empowering sub-national governments to delivery better infrastructure and services for economic development, job creation and social wellbeing, focusing on private sector coordination and investment and mainstreaming citizen participation. The Program supports a variety of investments focused on local economic development and job creations, including investment to spur growth and competitiveness of economic sectors in the governorates and infrastructure in and around the six industrial zones in the governorates. The Program also supports local and regional roads to connect the Sohag and Qena governorates with regional and national markets. Other infrastructure for both businesses and citizens will also be supported, including water supply and sanitation, solid waste management and electricity. The Program will provide incentives for governorates for the effective delivery of quality infrastructure and services including in terms of operations and maintenance.

    Transport

    The construction of Cairo Airport Terminal Building 2 has been completed which increases airport capacity by 8 million passengers/year. The Railway Restructuring Project has renewed 293km of tracks on the Cairo-Aswan and Benha-Port Said lines. 

    Last Updated: Apr 01, 2017

Api


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

Cairo, +20-2-2-574-1670/71
World Trade Center, 1191 Corniche El-Nil, Boulaq, Cairo, Egypt
ewahby@worldbank.org