Egypt Overview: Development news, research, data

Egypt’s long-standing challenges have intersected with multiple global shocks causing a foreign exchange crisis, historic inflation, and pressures to worsen the already-stretched fiscal and external accounts. While triggered by the global poly-crisis, the rising macroeconomic imbalances in Egypt reflect pre-existing domestic challenges, including the sluggish non-oil exports and FDI, constrained private sector activity and job-creation (notably for youth and women), as well as the elevated and rising government debt. Below-potential revenue mobilization is further limiting the fiscal space required to advance human and physical capital for the Egyptian population which exceeds 105 million, almost 30 percent of whom are below the national poverty line, according to 2019 official estimates.

In response to the concurrent shocks, Egyptian authorities have been undertaking a series of policy adjustments. These include raising key policy rates, allowing the exchange rate to depreciate substantially since March 2022 to clear foreign exchange market distortions, and introducing social mitigation measures (including increases to pensions, food subsidies and expansion in the coverage and allocations of the cash transfer programs) to partially shield the vulnerable. The 46-month IMF Extended Fund Facility (approved in December 2022) is expected to support the gradual restoration of macroeconomic stability and to underpin structural reforms, including those outlined in the State Ownership Policy to enhance competitive neutrality for improved private sector participation.

Economic activity has been adversely impacted by the overlapping global shocks as well as domestic supply bottlenecks, with growth declining to 4.2 percent during FY23 (July 2022—June 2023) from 6.6 percent a year earlier. Further, inflation has been in the double-digits since March 2022, accelerating to 37.4 percent (food inflation at 71.7 percent) in August 2023. And while total foreign exchange resources (including ‘official reserves’ and ‘other foreign currency assets’) have started to recover from their sharp drop in March 2022 (last reported at US$42.9 billion at end-August 2023), hard currency supply remains a key challenge.

Egypt’s overall macroeconomic environment during FY2023/24 is expected to be undermined by the concurrent global shocks and domestic macroeconomic imbalances, before starting to improve over the medium-term as the country continues to push ahead with stabilization and structural reforms. Creating fiscal space remains crucial to advance Egypt’s human capital. Importantly, continuing to pursue reforms (including enhanced trade policy and facilitation, effective implementation of the State Ownership Policy, fostering competition, strengthened governance and rule of law, as well as improvements in the broader business environment) can unleash the private sector’s potential in higher value-added and export-oriented activities necessary for job-creation and better living standards.

Last Updated: Oct 10, 2023

The World Bank is supporting Egypt’s development agenda through its current active lending and advisory services portfolio with a focus on strengthening human capital, improving service delivery, building the country’s resilience to shocks, and addressing the pandemic and climate change, as well as the impacts of macroeconomic shocks. The active interventions include:

The Bank has supported the government in designing and scaling up social safety net programs under the Strengthening Social Safety Net Project with an Investment Project Financing (IPF) Loan for $400M signed in 2015. Building on the success of the Takaful and Karama program, an Additional Financing IPF loan for US$500 million was signed on September 11, 2019, bringing the total IBRD financing in support of the program to $900 million. As of December 2022, the program had reached about 5 million households (around 20 million citizens): 4.1 million households under the operation, 320,000 households under the old Daman, pending issuance of the new law, and 600,000 households covered by the National Coalition for Community Development Work. Thanks to its adaptive shock responsive social registry and strong delivery system, the program efficiently expanded its coverage in recent years in response to consecutive crises such as the COVID-19 pandemic, the repercussions of the war in Ukraine, and the devaluation of the Egyptian pound. The project is piloting productive inclusion and graduation models in eight governorates under the "FORSA" program, to support the transition from protection to production and link beneficiaries to economic opportunities through asset transfer, wage employment, and training, with a focus on women and youth. A new operation of $500 million was approved by the Board on December 22, 2022 to continue to support efforts to increase coverage and effectiveness of the Takaful and Karama Cash Transfer program, expand its social registry to support effective targeting of social protection programs, and enhance access of the poor and vulnerable to economic inclusion opportunities.
The Upper Egypt Local Development Program (US$500 million) is improving local government capacity for quality infrastructure and service delivery to citizens and local firms in four of Egypt’s poorest governorates, Qena, Sohag, Minya and Assuiut, which have a combined population of around twenty million inhabitants. Citizens in 20 cities, 400 villages and 2970 hamlets have benefited from the expansion and improvement of municipal services and infrastructure. This includes water and sanitation, local markets, vocational areas, local roads, public spaces, and solid waste management. Over 3,300 firms have seen progress resulting from enhancing the management and quality of infrastructure in six industrial zones, reducing the time required to obtain construction permits and shop licenses and developing 14 clusters focusing on handicrafts, agribusiness, and other endogenous clusters in Upper Egypt. 5.6 million citizens, 48% of them women, have benefitted from 4,161 completed infrastructure projects in the program. The program has been following performance grants to incentivize the performance of the governorates under different technical areas such as asset management, own-source revenues, participatory capital investment planning along with cross-cutting themes (fiduciary and social & environmental safeguards). The Upper Egypt Local Development Program exerted considerable efforts towards replicating and scaling up its best practices and reforms not only to the rest of the Upper Egypt governorates but also to the other 27 governorates across the country. This was done by developing and implementing a concrete replicability action plan to enable the governorates to implement such best practices.
The Emergency Food Security and Resilience Support Project (US$500 million) has helped cushion the food and nutrition security impact on Egypt of the global food crisis and commodity price increases in the aftermath of Russia’s invasion. High prices and nutritional shortfalls affected the poor and vulnerable, who rely on bread for their daily nutritional needs, and who comprise around 32 percent of Egypt’s population. The Project ensured the short-term supply of wheat for uninterrupted access to bread for poor and vulnerable households, thus availing emergency wheat imports for direct assistance to the poor and vulnerable population served through Egypt’s Bread Subsidy Program. To date the project has procured 1,150,000 metric tons of wheat. In addition to emergency response measures this Project will bolster medium- and long-term resilience by supporting the national efforts to reduce waste and loss in the wheat supply chain through the upgrade and expansion of climate-resilient wheat silos, sustainably improving domestic cereal production, and strengthening Egypt’s preparedness and resilience to future shocks.
The Sustainable Rural Sanitation Services Program (US$850 million IBRD and $300 million co-financing from the Asian Infrastructure Investment Bank (AIIB), will bring sanitation to about 1.73 million people in highly polluted villages and satellite areas of Sharkia, Dakahliya, Beheira, Menoufia, Damietta and Gharbia governorates in the Nile Delta, through household connections and wastewater treatment facilities. The program empowers and incentivizes local water and sanitation companies (WSCs) to deliver effective, inclusive and accountable decentralized services. It is laying the groundwork for sustainable development of the sector by supporting the development of its water and sanitation sector strategy, implementation of information systems, and supporting regulatory and tariff reforms. The WSCs have achieved or exceeded their targets set under annual performance improvement action plan, despite the impact of the pandemic and macro-economic challenges. To date, over 125,000 households have been connected to fully functional sanitation systems, and contracts covering over 230,000 household connections are being implemented. The program has also implemented a citizen report card, the first of its kinds in the sector, for measuring beneficiary satisfaction and also integrate participation of women across the project lifecycle by operationalizing and supporting women-only citizen committees.
The Inclusive Housing Finance Program (US$1 billion, including Additional Finance) aims to improve the affordability of formal housing for low-income households in Egypt and to strengthen the Social Housing and Mortgage Finance Fund’s (SHMFF) capacity to design policies and coordinate programs in the social housing sector. The program is a top priority for the Egyptian authorities, with a 63% disbursement ratio. Since program inception, over 500,000 subsidies have been delivered to low-income households across Egypt’s 27 governorates. This has contributed to greater social and youth inclusion: Over 23% of the beneficiaries are women, 70% are below the age of 40 and 18% are below the age of 30. In addition, 65% of beneficiaries are first time borrowers, having never engaged with a financial institution prior to the initiation of this program.
The Bank-supported Egypt COVID-19 Response Project (US$50 million) was approved in May 2020 and closed on August 30, 2023. It focused on immediate operational challenges and areas identified as critical gaps in Egypt’s national response to the pandemic. Project funds complemented the activities of Egypt’s COVID-19 plan by supporting costs associated with: (i) procuring and distributing medical equipment, including ICU and laboratory testing equipment and supplies, infection control products and PPE; (ii) “Corona incentive pay” for healthcare personnel undertaking COVID-19 related tasks; (iii) health worker training; and (iv) operation of designated quarantine, isolation, and treatment centers.
The Transforming Egypt’s Healthcare System Project (US$530 million) aims to: (i) improve the quality of primary and secondary health care services; (ii) enhance demand for health and family planning services; and (iii) support the prevention and control of Hepatitis C. The project benefits nearly 55 million Egyptians nationwide by improving services at 600 primary healthcare facilities and 27 hospitals. It supported the largest screening campaign of its kind, the 100 Million Healthy Lives campaign. It screened 53 million Egyptian citizens and residents for Hepatitis C and noncommunicable diseases and risk factors and treated an estimated 1.2 million Hepatitis C patients.
The Supporting Egypt’s Universal Health Insurance System (UHIS) Project (US$400 million) was approved in June 2020. The project supports Egypt to implement the new UHIS, as envisioned in the Universal Health Insurance Law passed in 2018. This includes Phase I of its rollout in six governorates: Port Said, Suez, Ismailia, South Sinai, Luxor and Aswan. The governorates are home to about six million people, close to 6% of Egypt’s total population.
In April 2019, the World Bank approved the Catalyzing Entrepreneurship for Job Creation Project (US$200 million) which aims to create jobs and improve economic opportunities for Egyptians, with a focus on women and youth. This project provides a comprehensive package of financial (debt financing and equity investments) and nonfinancial support to traditional Micro, Small and Medium Enterprises, innovative startups, and high growth firms. It went into effect in January 2020. To date, the project has maintained and created more than 380,000 jobs and supported more than 188,000 beneficiaries — of which 43% are women and 40% are youth.
The Supporting Egypt Education Reform Project (US$500 million) supports a major government effort to improve teaching and learning conditions in public schools, with a focus on: (i) improving the quality of kindergarten (KG) education; (ii) enhancing the capacity of teachers, supervisors, and educational leaders, and monitoring their teaching, mentoring, and leadership practices; (iii) the intensive use of alternative resources for teaching and learning; and (iv) the introduction of new, higher order thinking skills-driven secondary examinations, governing access to universities. To date, the Ministry of Education and Technical Education: (a) administered the grade 4 national assessment for literacy and numeracy twice; results of the April 2023 test will be published results in October 2023; (b) to improve quality in KG, developed a new quality assurance system, administered baseline data collection to guide quality enhancement plans in an initial phase of 35 percent of KGs as well as developed and accredited new KG teacher training modules driven by KG diagnostic studies to improve KG teaching practices; (c) developed and administered a new secondary examination system nationwide, driven by higher order thinking skills, and deployed the new item test bank and scoring software since the grade 10 cohort of 2018/2019 leading to the third cohort of students sitting for the school graduation examinations in 2022/2023. This required training to enable teaching and nonteaching staff to create an item test bank (repository of test questions), manage the test administration and the scoring software of the tests, and disseminate the scores electronically less than a month after students are assessed. Training is expanding to more staff and teachers alongside the expansion of the new secondary examinations system to additional student cohorts; and (d) developed and made available curated resources through digital and TV educational channels to students and teachers in grades 4-12. The project also supports a high frequency pulse survey to guide strategic communication planning, drawing on stakeholders’ views and perceptions of reform activities as well as monitor access and usage of alternative learning resources.
The Railway Improvement and Safety for Egypt, RISE, Project (US$440 million) was approved in March 2021, complemented by a US$241 million contribution from the Egypt National Railway (ENR) network. The project will modernize the railway signaling along the Alexandria-Cairo-Nag Hammadi corridor of the ENR and help improve safety at select stations and junctions using a safe systems approach, which will include gender, citizen engagement and disability considerations. The project will introduce reforms, using performance-based funding, in accordance with best international practice, to support ENR to deliver high quality services at a lower cost through the adoption of public service obligation and multi-annual infrastructure contracts. An estimated 1.4 million daily users of the railways will be able to rely on a safer and more reliable service.
The Cairo Alexandria Trade Logistics Development Project (US$400 million) was approved in September 2022, complemented by a US$ 600 million contribution from the Egypt National Railway (ENR) network. The project will improve the performance and support the decarbonization of the logistics and transport sectors in the Alexandria–6th October–Greater Cairo Area railway corridor. The project includes developing and adopting a transparent railway Infrastructure Access Charging scheme for the Egyptian railway network to attract private sector participation; developing a regulatory framework including identifying the detailed scope and responsibilities of a railway regulator and the associated governance framework; and identifying and developing additional rail‐friendly policies to increase traffic on the railway network.
The Greater Cairo Air Pollution Management and Climate Change Project (US$200 million) was approved in September 2020 and became effective on June 9, 2021. The prime minister witnessed the signature of the inter-ministerial agreement establishing the terms of partnership between implementing agencies. The project will contribute to reducing air pollution and climate change emissions in Greater Cairo. Activities are focused on building responsiveness and resilience into institutions and systems, with an emphasis on the waste sector (treating and minimizing contaminated waste and establishing properly managed final disposal facilities) and reducing air and climate emissions from the public transport sector. The project aims to support an integrated climate and air quality management plan for Greater Cairo, the construction of an integrated waste management facility and the financing of a demonstration low/no emission e-bus transport fleet and activities related to running it. These are expected to reduce the burden of air pollution on health and on the economy.
Implementation of World Bank operations is informed and supported by a robust program of Advisory Services and Analytics (ASA) focused on disseminating analysis to inform interventions, building capacity, and leveraging lending. The World Bank will continue to rely on partnerships with grant-making donors through existing trust funds and umbrella programs. Core analytics such as the Systematic Country Diagnosis (SCD), the Country Private Sector Development (CPSD) Report, and the Country Climate and Development Report (CCDR) have guided the development of the new Country Partnership Framework (CPF). Other Advisory Services and Analytics have guided the sectoral policy dialogue and reforms related thereto, including in macro-fiscal, health and population, education, infrastructure, gender and private sector competitiveness.