Overview

  • The Government of Egypt (GoE) is implementing bold reforms to address the deep-seated issues needed for achieving the World Bank Group’s twin goals of eliminating extreme poverty and promoting shared prosperity. The reforms, supported under the Country Partnership Framework, have helped to stabilize the economy.  

    In FY18, real gross domestic product (GDP) grew by 5.3 percent, compared to an average of 4.3 percent in the three years before. This pickup in growth has been driven by public investments, private consumption, and exports of goods and services, while the private sector response is delayed. Although still high, inflation has begun to ease over the past 18 months, slowing from a record 33 percent in mid-2017 to 12.7 percent in January 2019. The positive impact of macroeconomic and policy reforms has markedly improved Egypt’s external position. The current account deficit narrowed to 2.4 percent of GDP in fiscal year 2018, down from 6.0 percent in the previous year, driven primarily by strong remittances and the recovery in tourism. A resurgence of portfolio and international financial institution inflows has supported the capital and financial account. Important fiscal reforms on both the expenditure and revenue sides have prompted a gradual decline in the fiscal deficit, but the public debt ratio remains elevated. Over the past three years, the overall fiscal deficit narrowed by three percentage points to 9.7 percent of GDP in FY18, while the deficit in the primary balance improved by 3.6 percentage points—and turned positive for the first time in more than 15 years—during the same period. The new value-added tax (VAT) regime, introduced in September 2016, boosted tax revenues, while energy subsidy reforms and measures to rein in the wage bill reduced expenditures as a share of GDP. Still, the debt ratio remains high at 98.7 percent of GDP in FY18.

    To alleviate the adverse effects of the economic reforms on the poor and vulnerable and increase investments in Egypt’s human capital, the government has scaled up key short-term social protection mitigating measures, including through higher allocations of food smart cards and targeted conditional and unconditional cash transfer programs. To effectively achieve human development through social protection measures, the conditionality of the cash transfer programs is related to health and education and complemented by the launch of ambitious reforms in the education and health sectors to strengthen the supply side of the equation and improve Egypt’s human capital outcomes. The country’s social protection measures are shifting from generalized energy and food subsidies to more integrated poverty and human development targeted programs. Job creation to reduce unemployment, especially for the youth, and absorb around 700,000 new entrants to the labor market over the coming five years is a key challenge ahead.  

    Last Updated: Apr 01, 2019

  • The World Bank Group’s current engagement is guided by the Egypt Country Partnership Framework (CPF) 2015–19, which focuses on fighting poverty and inequality, informed by a rigorous analysis of key constraints to poverty reduction and shared prosperity and by extensive consultations with the government, the private sector, academia, civil society organizations, and youth groups. The CPF comprises three interconnected strategic focus areas that are consistent with the GoE’s longer-term development strategy: i) improving governance, by encouraging fiscal transparency and efficiency, promoting citizens’ engagement and feedback, and strengthening inclusive institutions, ii) improving opportunities for private sector job creation, by reforming the regulatory environment to foster private investment, boosting energy-generation and energy-efficiency capacities, enhancing the capacity of key transport infrastructure and services, broadening access to improved agriculture and irrigation services, and increasing access to finance for micro-, small- and medium-sized enterprises, and iii) social inclusion, by increasing access to short-term income opportunities for the poor, strengthening the social safety net system, improving the quality of health care and education, promoting housing for low-income households, improving sanitation and sewage services in rural areas and expanding natural gas connections.  

    The CPF was designed to remain flexible so that it could respond to the country’s evolving needs, while bringing integrated development solutions that are customized to Egypt’s specific context with world class expertise. Under the two-year extension proposed as part of the Program and Learning Review that will be discussed by the Board of Directors on April 30, 2019, the framework would allow the World Bank Group to support Egypt’s transition to a digital economy and e-government services, step up the human capital development agenda on health, education, and social safety nets, as well as undertake interventions that cut across all three focus areas to reduce spatial disparities, boost job creation, and enhance governance. 

    Last Updated: Apr 01, 2019

  • The Government of Egypt supported by the World Bank Group has achieved significant results across all three focus areas under this CPF. Key results include:  

    Policy reforms supported by the US$3.15 billion Development Policy Finance program- consisting of three operations over a period of three years (2015 -2017)- have 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, while 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. The environment for investors has been strengthened by amending the Investment Law, implementing the Competition law, and reforming the industrial licensing regime, which helped reduce the time taken in providing licenses to low risk industries by 80%.  

    Collaboration between IBRD, the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA) has attracted private investment in the energy sector. The Egypt Photovoltaic Solar Feed-in-Tariff Program was enabled by a programmatic WBG intervention addressing country-, sector-, and project-level risks through policy reforms, technical assistance, investment, and de-risking instruments. The sector has improved significantly, and work is under way to support the unbundling and restructuring of Egypt’s power utilities to ensure their financial sustainability on a stand-alone basis. The joint World Bank Group effort resulted in the establishment of the Eastern Mediterranean Gas Forum in Egypt, complemented by the WB Pan-Arab Regional Energy Trade Platform Initiative to support cooperation among Arab countries to scale up electricity and gas trade, a step towards establishing Egypt as a regional energy hub. The macro fiscal reforms facilitated redirection of the Government budget towards social protection and human capital development. The World Bank Group is currently supporting Egypt’s human capital investments package, which aims at improving citizens’ lives and welfare. This package includes operations that target education and health sector reforms, inclusive housing finance program, natural gas connections and sanitation services in rural areas and lagging regions.  

    Below are a few examples of how the bank’s operations have benefitted Egyptians: 

    • 2,268,801 households (nearly 10 million Egyptians) have benefitted from the Takaful and Karama cash transfer program, 67% of them are below the poverty line and 88% are female-headed, distributed over 27 governorates, 345 districts, 5,630 villages, and 2,636 social units. 
    • As of March 2019, 41.5 million Egyptians have benefitted from the “Transforming Egypt’s Healthcare System’’ project through being  screened for Hepatitis C and Non- Communicable diseases. The three phased screening campaign supported by the project will run until end of April 2019. The campaign aims to screen a total of 55 million citizens and treat an estimated 1.5 million Hepatitis C patients. Upon conclusion of the first two phases, US$ 40 million dollars’ worth of Hepatitis C medications were supplied to health department centers. 
    • Through the ‘’ Inclusive Housing Finance Program’’  205,538 low income Egyptians were the provided with affordable ownership and rental housing, 39,728 of which are females. 
    • The ‘’Promoting Innovation for Inclusive Financial Access’’ project helped 169,041 Egyptians to start their businesses, which resulted in creating 294,784 jobs. 
    • The ‘’Sustainable Rural Sanitation Services Program’’ installed 5,000 household sanitation connections in rural Egypt. The operation aims to decentralize sanitation services to improve their quality by making them more accountable to citizens and install a total of 167,000 household sanitation connections in rural Egypt by 2022. 

     

    Last Updated: Apr 01, 2019

Api


LENDING

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

*Amounts include IBRD and IDA commitments


PHOTO GALLERY

More Photos Arrow

In Depth

Jul 16, 2019

Egypt Economic Monitor, July 2019- From Floating to Thriving: Taking Egypt’s ...

This report looks at an important aspect of the Egyptian economy’s competitiveness: export performance and integration into global markets.

Apr 01, 2019

Egypt's Economic Update - April 2019

Egypt’s economic growth has been robust, averaging 5.3 percent in FY2017/18; a rate that was sustained through Q1-FY2018/19.

Mar 03, 2019

Egypt: Women Economic Empowerment Study

The study provides the context of the Egyptian women’s share of the public space as reflected in their access to education, health, social protection, and decent work opportunities.

Dec 11, 2018

Egypt: Enabling Private Investment and Commercial Financing in Infrastructure

The report identifies opportunities and constraints to expanding commercial finance and private investment across energy, transport, water and sanitation, and agriculture.

Additional Resources

Country Office Contacts

Nile City Towers,
North Tower, 29th Floor,
2005C Corniche El-Nil, Ramlet Boulac,
Cairo, Egypt
+(202) 246 199 83/4/5
ewahby@worldbank.org