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