The World Bank revealed Saturday details of its $3 billion loan to the Egyptian government which entail reducing the government’s wages bill, energy subsidies, while raising tax revenue and electricity prices.
Last December, the World Bank agreed to grant Egypt the loan to be disbursed over three annual loans worth $1 billion each in the next three years, to support the Egyptian state’s general budget and improve Egypt’s financial situation.
According to previous statements by the World Bank, the loan aims to ensure providing sustainable energy through integrating the private sector in this field and improving the business environment.
In an 80-page document published on the World’s Bank website, the bank said it agreed with the Egyptian government to reduce the size of the central government’s wages and salaries bill as a percentage of the nominal Gross Domestic Product (GDP) from 8.2 per cent in the fiscal year 2015-2016 to 7.5 per cent by fiscal year 2018-2019.
The agreement eyes increasing non-sovereign corporate income tax proceeds and sales taxes on goods and services from 5.4 per cent of GDP in the fiscal year 2015-2016 to 6.7 per cent of GDP by the fiscal year 2018-2019.
It also aims to reduce energy subsidies as a percentage of GDP from 6.6 per cent recorded in the previous fiscal year, 2014-2015 to 3.3 per cent by fiscal year 2016-2017.
Additionally, Egypt agreed to increase the “average electricity tariff across all consumer groups” from EGP 0.226 per kilowatt-hour in 2014-2015 to EGP 0.451 per kilowatt-hour by 2018-2019, nearly doubling it.
It also agreed to increase commissioned private sector-owned renewable energy projects, to raise output from renewable energy from 0 megawatts in October 2015 to 1,500 megawatts by the end 2018-2019.
Source: Aswat Masriya