With a population of 355 million and the vast majority of people living in middle-income countries, the MENA region came into the Arab Spring with multiple strengths, including a young and educated population, strong resource base, and economic resilience that helped it weather the 2008/9 global financial crisis.
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The World Bank Group’s second round of discussions with various stakeholders throughout Egypt is taking place this week in Cairo, Alexandria and Aswan to prepare for a new partnership strategy which w... Show More +ill guide the Group’s engagement in the country over the next five years. The 2015-2019 Country Partnership Framework (CPF) aims at supporting Egypt’s development priorities consistent with the regional strategy of the World Bank Group in the Middle East and North Africa and the World Bank Group’s overarching goal of ending extreme poverty and boosting shared prosperity. The consultations around the CPF were launched last year and benefited from a wide spectrum of input from the government, civil society, youth, private sector, academia and development partners. Furthermore, online consultation took place to maximize reaching out to online users and listen to their development priorities. The purpose of the current consultations is to report back to the participants from last year’s meetings on the progress so far, and how their input has been taken on board. In parallel, the International Finance Corporation (IFC), the private sector arm of the World Bank, is holding meetings with private sector representatives “We are very pleased to come back to our stakeholders and inform them on how we made use of their valuable input and feedback on how best we can support Egypt. We are very pleased to reach out to various governorates especially those in Upper Egypt,” said Gerard Byam, World Bank’s Acting Vice President for the Middle East and North Africa region. The Country Partnership Framework will be officially presented to the World Bank Group’s Board of Directors in May 2015 after it has been discussed with the Government of Egypt.Consultations in Upper Egypt demonstrate the significance of lagging regions as a development priority for Egypt and also underline the World Bank’s keen interest in listening to input and feedback from stakeholders across the country.The CPF is a joint document of the three WBG institutions - the World Bank, International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) - and will build on their respective strengths and areas of expertise. The World Bank Group in Egypt: The current portfolio of the World Bank Group in Egypt includes 26 projects for a total commitment of US$5.4 billion in FY15, including 17 IBRD lending operations ($5.27 billion) and 9 major Trust Funds ($139.6 million). The World Bank finances projects for faster delivery of benefits to the people of Egypt in key sectors including energy, transport, water and sanitation, agriculture and irrigation as well as health and education. Between FY11-14, IFC committed a total of almost $1.1 billion in 20 projects (of which $392 million is mobilization). IFC has focused on supporting companies with the ability to create jobs, boosting access to finance for small and medium enterprises, and demonstrating Egypt's long-term potential to investors. IFC has also worked on promoting regulatory reforms designed to spur economic growth; and boosting the skills of young job seekers.In FY2013, MIGA issued a guarantee for US$150 million, reinsuring the United States Overseas Private Investment Corporation’s coverage to Apache Corporation for the exploration, development and production of crude oil and natural gas helping to keep up the supply of energy with the growing domestic demand. Show Less -
KUWAIT CITY, February 12, 2015 – Addressing the twin challenges of scaling up universal health coverage (UHC) and containing non-communicable diseases (NCDs) in the Middle East and North Africa (... Show More +MENA) region is the focus of a five-day policy seminar sponsored by the World Bank in coordination with the International Monetary Fund (IMF) Middle East Center for Economics and Finance (CEF).The policy seminar brings together 37 senior level representatives from Ministries of Health, Finance, and Planning and health agencies in the MENA region, as well as representatives from academia and non- governmental organizations. Presentations by World Bank specialists with expert contributions from World Health Organization (WHO), Johns Hopkins University, US Center for Disease Control (CDC) and the Organization for Economic Cooperation and Development (OECD), are geared towards familiarizing policy makers and participants with global and regional experiences in scaling up universal health coverage and containing non-communicable diseases.“The World Bank is pleased to be hosting this policy seminar in Kuwait for such a wide-ranging and high-level group of health officials from the MENA region,” said Bassam Ramadan, World Bank Country Manager in Kuwait. “The rising burden of non-communicable diseases and the growing momentum towards expanding health coverage in the region make this seminar highly relevant and timely. It provides an open venue for all participants to share national experiences and lessons learned about two topics dominating the health reform agendas of many countries.” Specific topics covered in the workshop include health financing trends in the MENA region, UHC country experiences, supply-side readiness for implementing UHC, global and regional trends in the burden of non-communicable diseases and injuries. The seminar is part of an annual series of knowledge-sharing events organized by the World Bank and the IMF in Kuwait. Oussama Kanaan, Director of the IMF Middle East Center for Economics and Finance in Kuwait, which hosted the policy seminar, discussed in his opening remarks the increased emphasis the IMF has placed in recent years on "inclusive development," in which building a strong health care system benefiting all segments of society is a key component.More than 36 million people die each year from NCDs, and around 80 percent of these deaths are in low- and middle-income countries. “The rapid shifts in disease burden towards NCDs place poor people in these countries at higher risk of not having access to appropriate services and incurring payments for health care that push them deeper into poverty,” said Tim Evans, Senior Director for Health, Nutrition and Population at the World Bank Group, and one of the seminar participants. “To help address this challenge, the World Bank is supporting countries around the world to achieve UHC by 2030, using our global knowledge, country programs and financial support.”The challenge for MENA countries is how to expand health coverage schemes to cover everyone, provide a range of quality health services, and protect them financially – in the face of a burgeoning NCD crisis. The GCC countries have some of the highest rates of obesity and diabetes prevalence in the world. In 2030, NCDs will account for around 87 percent of all deaths in GCC countries and around 81 percent in in-non-GCC states. “Among the most pressing health system challenges in the MENA region are inadequacies in health coverage and a spiraling NCD epidemic, particularly in the GCC region,” said Enis Barış, World Bank Practice Manager for Health, Nutrition and Population in the MENA region. “The World Bank can support MENA countries tackle these twin challenges through financial mechanisms, analytical work, and knowledge sharing about global experience.” Show Less -
In doing so, the roadmap aims to prioritize key areas of focus for Egypt, including describing which existing programs to continue supporting and which new programs to consider for development, all un... Show More +der an integrated and interdependent structure.The paper is not meant to be an assessment of all the challenges facing the entire Egyptian healthcare system, but instead is a focused assessment of how the overarching aim of “social justice” can be achieved in the healthcare sector through an emphasis on improving services for the most disadvantaged groups. Show Less -
New World Bank Report Details the Varying Impacts of the Decline in Prices on the Region's Oil Importers and ExportersWASHINGTON, January 29, 2015 – The over-50 percent decline in world oil prices—fro... Show More +m US$115 a barrel in June 2014 to less than US$50 today—will have significant consequences for the economies of the Middle East and North Africa (MENA) region. According to the World Bank’s latest MENA Quarterly Economic Brief the oil importers that are expected to gain include Jordan, Tunisia, Lebanon and Egypt. The trade balances for these countries could improve by up to 2 percent of GDP. The oil exporters will likely run larger fiscal and current account deficits or their surpluses will shrink substantially. “Oil importers will benefit from lower import and fuel subsidy bills, while exporters—some of whom depend on oil for 80 percent of their income—will lose export and fiscal revenues,” said Shanta Devarajan, World Bank Chief Economist for the Middle East and North Africa region.The report, Plunging Oil Prices, focuses on the implications of low oil prices for eight developing countries, or the MENA-8 (oil importers: Egypt, Tunisia, Lebanon and Jordan and oil exporters: Iran, Iraq, Yemen and Libya) and the economies of the GCC (Gulf Cooperation Council), who play a major role in providing funds in the form of aid, investment, tourism revenues and remittances to the rest of the countries of the region.Yemen and Libya are among the most vulnerable oil producers while Iran and Iraq could experience a worsening of the oil trade balance (net oil exports) in excess of 10 percent of GDP in 2015. The oil-exporting countries of the Gulf Cooperation Council are in a much better position due to their ample reserves, but they too could endure over a US$215 billion loss in oil revenues, more than 14 percent of their combined GDP.“The oil shock could threaten the ability of some of the oil exporters to meet domestic spending commitments,” said Lili Mottaghi, World Bank MENA Economist and the author of the report. “Their options include drawing down reserves, accumulating debt, and cutting spending on fuel subsidies and public-sector salaries.”Oil importers such as Egypt, Jordan and Lebanon face a risk as their economies receive large flows of remittances and aid from the GCC. However, based on previous episodes, the MENA Quarterly Brief concludes that lower oil prices will likely lead to slower growth, but not a decline in remittances. Show Less -
The over-50% decline in world oil prices—from US$115 a barrel in June 2014 to less than US$50 today—will have significant consequences for the economies of the Middle East and North Africa (MENA) regi... Show More +on. This report titled " Plunging Oil Prices", focuses on the implications of low oil prices for eight developing countries, or the MENA-8 (oil importers: Egypt, Tunisia, Lebanon and Jordan and oil exporters: Iran, Iraq, Yemen and Libya) and the economies of the GCC (Gulf Cooperation Council), who play a major role in providing funds in the form of aid, investment, tourism revenues and remittances to the rest of the countries of the region. Show Less -
Judging by the futures market, where the price of oil for delivery in August 2015 is US$56 per barrel, there is little optimism about a recovery in oil prices. With cheap oil looking like it is here t... Show More +o stay, the latest Quarterly Economic Bulletin offers a breakdown by country of the potential regional consequences. Here are the highlights: Gulf Cooperation Council (Loss) oil and gas revenues in 2013 accounted for over half of the Gulf economies’ GDP and 75% of total exports earnings. If prices stay low for a sustained period it is estimated that the region’s governments will face over a US$215 billion loss in oil revenues, more than 14% of their combined GDP. Gulf countries had on average been earning more than they spent, but the combination of rising government spending and falling oil prices could reverse that. The combined fiscal surplus of about 10% of GDP in 2013 could turn into a deficit of 5% of GDP. While they have significant reserves to cover any shortfalls, there are signs that regional governments are re-thinking their spending. Saudi Arabia – with reserves of US$700 billion – is preparing to increase energy and fuel prices. Bahrain, the most severely affected, is contemplating a request for budget support from its Gulf allies. Oman has released a 2015 budget that includes no spending cuts or additional revenues, but may resort to both in the year ahead. The UAE has begun searching for additional sources of revenue, including a tax on remittances – if this policy is adopted throughout the Gulf, it could impact the hiring of expatriates and the flow of remittances. Total remittances from GCC countries to the rest of the Middle East and North Africa region amounted to US$21 billion in 2013, with Saudi Arabia accounting for half that figure.Egypt (Gain) Oil consumption in Egypt has been rising by an average of 3% per year, outstripping what the country can produce. Cheaper oil will allow Egypt to buy more of it from a greater variety of sources to meet its rising demand. Look for fewer blackouts this summer, which would be a boost to political and social stability. If oil stays at the current price of around US$50 per barrel, Egypt will be able to save on the EGP 100.4 billion budgeted for energy subsidies (based on an expected price of US$105 per barrel.) Cheap oil is also expected to lower inflation and poverty rates – the one downside is potentially fewer tourists from the Gulf, and fewer expatriates sending money home. The impact of the latter will depend on how long lower oil prices stick around.Iran (Gain/Loss) politics will be as important as the price of oil for Iran. If a deal is reached in the nuclear talks with the P5+1 (the United Nations Security Council and Germany) and oil sanctions are lifted, oil exports are expected to rebound to pre- sanctions levels by 2017. As oil makes up about 80 %of total export earnings and 50 to 60% of government revenues, the economy could grow substantially under this scenario. With no deal, cheap oil could mean a 60% drop in fiscal revenues, down to $23.7 billion in 2015 from its peak of $120 billion in 2011/12. Under this scenario, a loss of about 20% of GDP would be expected, bringing GDP growth down to zero (from the previous year’s 1.5%), and the economy would continue to shrink. This will put tremendous pressure on inflation, unemployment, the fiscal deficit and the currency.Iraq (Loss) oil exports have increased, despite the current turmoil, reaching an average of 2.9 million barrels per day in December 2014, the highest level since 1980. Oil revenues, however, fell from May to December, 2014 – the value of monthly exports dropped from $8 billion to $5.4 billion. This comes at a time when spending is higher than usual as the government battles to regain ground from ISIS. Lower oil prices will further squeeze government finances, with GDP growth expected to fall to 1.5% in 2015 – remarkably low for a country that should still be in reconstruction-driven growth. The draft 2015 budget – which was based on an anticipated price of US$70 per barrel – is being revised to identify savings through a freeze on public hiring and rooting out abuses (such as the infamous 50,000 ‘ghost soldiers.’) The government is also seeking to delay its final reparation payments to Kuwait, which would defer nearly $5 billion. Even with these savings, maintaining government spending in the face of falling oil revenues will pose a significant challenge. The situation is further complicated by ISIS cutting off the main northern supply routes, raising the price on all imports, including food. This will make the country’s universal food ration system, which is the sole source of nutrition for many Iraqis, more expensive to maintain. Jordan (Gain) the large drop in oil prices is a positive shock, promoting growth by lowering the cost of production. The government will be able to save the US$300 million budgeted in 2015 to compensate households for the lifting of fuel subsidies (the system of cash transfers was designed to stop automatically once oil fell below US$100 per barrel.) Both citizens and refugees will benefit from lower prices, as inflation dropped to its second lowest level since December 2009. Over the medium term, though, if cheap oil persists Jordan could see fewer remittances from its expatriate workers in the Gulf (over 60% of remittances to Jordan originate from the Gulf.) With lower revenues, Gulf countries could also be less generous with grants. Jordan relies heavily on these grants, and they were expected to form 2.7% of GDP in 2015.Lebanon (Gain) one significant way in which cheap oil will save the government money is by lowering the cost of supporting the national electric utility, Electricité du Liban (EdL). With tariffs unchanged since 1996 – when oil was $23 per barrel – EdL only covers a fraction of its costs. The government picks up the difference, with transfers to EdL amounting to 4.7% of Gross Domestic Product (GDP) since 2011. Lower oil prices will lower the cost of generating electricity and shrink EdL’s shortfall. This will in turn lower the transfers to EdL, albeit with a 6-9 month lag given the structure of outstanding contracts with fuel oil and gasoil providers. At an average of 8.3% of GDP, imported oil is also a significant component of Lebanon’s trade deficit, which cheaper oil will help to improve. The benefits will be counter balanced by the fact that, like other countries in the region, cheaper oil could affect the amount of money sent home by Lebanese expatriates in the Gulf. Yet as energy imports are greater than the total value of all remittances, a cheaper price per barrel is expected to improve the country’s balance of payments.Libya (Loss) there will be a high price to pay in lost oil revenues if rival political factions do not reach an agreement. Oil production is currently at one-fifth of its pre-crisis 1.6 million barrels per day. Libya has accumulated substantial financial reserves but the combination of low oil prices and low output has forced the government to draw on it. Reserves reached $100 billion in August 2014, falling by 20% since the start of the year, and could be depleted in four years if the current situation persists. One quarter of the population is on the public payroll, and public sector wages have been increased by 250% since the 2011 revolution. With no increase in oil production on the horizon, the government will struggle to meet its obligations. The Tripoli-based rival parliament recently announced that it was considering lifting fuel subsidies which stand at 20% of GDP – a move that would help close some of the widening gap between public spending and revenues.Tunisia (Gain) the newly approved budget was based on an anticipated oil price of $95 per barrel. Cheaper oil will mean the government will have to spend far less on energy subsidies. Lower oil prices will also lower the cost of producing and transporting food. A 15% drop in energy prices coupled with a 5% drop in the price of food could increase real incomes of the poor by 3 percent and of the bottom 40 percent of the population by 2.5 percent.Yemen (Loss) oil dominates the government budget. Lower prices combined with ongoing political instability (including frequent sabotage of oil pipelines) halved oil revenues. Receipts from May to September, 2014 totaled US$1.4 billion, compared with US$2.4 billion for the same period in 2013. Yemen also relies on remittances from expatriate workers in the Gulf – the source of 90% of all remittances – which may also be affected. Lower oil prices are expected to reduce prices of imported goods, though, and boost household consumption, especially for food items, as 55% of food products are imported. In addition, inflation would likely drop, as food constitutes about 44% of the Yemeni consumer’s spending. Yet to protect its currency and compensate for the drop in oil revenues, Yemen has been drawing on its foreign reserves. The country currently has enough to cover 4.6 months of imports, down from 5.1 months in September. This downward trend is likely to continue in the face of cheap oil and continued instability – and the decision by Saudi Arabia to suspend most of its aid. Yemen will need ongoing assistance from its development partners if it is to avoid a balance of payments crisis in the coming years in which it is unable to afford critical imports.*For more detailed analysis, please visit the latest issue of the Quarterly Economic Brief Show Less -