World Bank approves $360 million loan for Egypt’s second wave of structural reforms

The World Bank’s board of executive directors approved on Thursday a $360 million Development Policy Financing (DPF) loan to support Egypt’s post-pandemic recovery and enhance the country’s prospects for sustainable and inclusive growth.

The loan has been approved under the World Bank’s “Egypt Inclusive Growth for Sustainable Recovery”  Programme. This programme was launched with the aim of supporting the country’s second wave of structural reforms by concentrating on creating jobs and providing an inclusive enabling environment for the private sector to lay the basis for a sustainable recovery.

To further support achievement of the operation’s development objectives, the World Bank said the Asian Infrastructure Investment Bank (AIIB) is considering parallel financing for the operation of the same amount using the same package of policy reforms agreed with the WB.

According to the World Bank, Egypt’s first wave of macro-economic reforms stabilised the economy and enabled the country to enter the global COVID-19 crisis with greater resilience and improved fiscal and external accounts.

The newly approved “Egypt Inclusive Growth for Sustainable Recovery” operation builds on this by supporting a second wave of structural reforms focused on creating jobs and providing an inclusive enabling environment for the private sector laying the basis for a sustainable recovery, the bank added.

Egypt has remained one of the few countries that has maintained positive growth during the crisis, it added in a statement.

The reform programme implemented since 2015, as well as the quick action on fiscal and monetary measures to ease the effect of the pandemic on firms and households have buoyed Egypt’s economy during the crisis. Significant steps have also been undertaken to address the country’s long-term structural challenges that are helping with the pandemic recovery.

“Structural reform policies are integral to Egypt’s efforts to accomplish a sustainable and resilient economic recovery that enables the economy to weather future shocks,” Rania Al-Mashat, Egypt’s Minister of International Cooperation, said.

“This operation will support our efforts to maintain the reform momentum and achieve the milestones necessary for inclusive growth.” the minister added.

The programme strategically addresses some of the long-term structural issues, impacting growth through its focus on three thematic pillars: enhancing macro-fiscal sustainability, enabling private sector development, and fostering women’s economic inclusion, the bank further said.

The first pillar on Enhancing Macro-Fiscal Sustainability, backs improving the management of state-owned enterprises through enhanced transparency and reporting. It also bolsters debt transparency and debt management by introducing the regular publishing of a wider range of domestic and external debt data. This pillar also promotes and empowers a greener and more sustainable economic recovery through the issuance of green bonds, the statement further read.

The second pillar on Enabling Private Sector Development builds on Egypt’s first wave of reforms and supports digital and financial inclusion, the streamlining and automation of trade facilitation, and a modernisation of bankruptcy processes that aim to improve the country’s competitiveness and private sector job creation. The pillar also boosts the regulatory framework for private sector participation in waste management, which provides a basis for greener and more inclusive development in the sector.

The third pillar on Fostering Women Economic Inclusion, focuses on Egypt’s legislative and regulatory reforms that promote female participation in the labour force and supports government efforts to address gender-based violence. It includes steps to remove restrictions on women participation in sectors and limitations on working hours and supports the government adoption of a national code of conduct that promotes safe and decent transportation for women in railways.

Through a Country Platform Approach, the Egyptian Ministry of International Cooperation has organised key stakeholder engagements to ensure that the DPF programme supports and strengthens the reforms taken by the government. The programme’s design benefited from a collaborative process that had input from key stakeholders, including development partners, civil society, women, and the private sector.

“Through this operation and many more, we are proud to support Egypt’s endeavors to build back better,” Marina Wes, World Bank Country Director for Egypt, Yemen, and Djibouti, said.

“One of the key objectives of this operation is making Egypt’s growth more inclusive and more resilient to future shocks, by addressing long term structural challenges and recognising the pivotal role of women in the country’s economic growth.” Wes added.