The World Bank Group has announced its intention to provide Egypt with more than $6 billion in support over the next three years. This aid aims to assist Egypt, which has been grappling with challenges such as a foreign currency shortage, substantial budget deficits, and imbalances in its balance of payments. Of this financial assistance, $3 billion is allocated to government programs, while another $3 billion will be directed towards supporting the private sector. However, these allocations are contingent upon approval from the World Bank Group’s board.
This commitment from the World Bank Group follows Egypt’s recent signing of a loan agreement with the International Monetary Fund (IMF) on March 6, which increased IMF support to Egypt by an additional $5 billion. Additionally, on Sunday, Egypt announced securing $8.1 billion in financing from the European Union.
In a significant move on March 6, Egypt’s central bank allowed its currency, the pound, to plummet in value and declared its intention to permit the currency to trade freely. This decision came after the pound had been pegged against the dollar for a period of 12 months.
Of the $3 billion allocated for government and its programs over the next three years, the first $1 billion is expected to be disbursed by the end of June. Stephane Guimbert, Egypt country director for the World Bank, highlighted that a significant portion of this funding will be directed towards providing budget support. Additionally, various programs aimed at addressing climate issues, supporting small and medium-sized enterprises (SMEs), among others, will also receive funding.
In addition to the $3 billion allocated for government programs, the World Bank Group plans to channel another $3 billion through its private sector arm, the International Finance Corporation (IFC). This funding will be provided in the form of equity and loans, and will also include funds mobilized from other investors. Like the government program financing, this allocation is subject to approval by the World Bank Group’s board, which is expected to occur before the end of June. Once approved, disbursements will be made as promptly as possible thereafter.
The World Bank program aims to address various aspects, including assisting state-owned enterprises that remain under government control and improving their management practices to ensure fair competition with the private sector. Additionally, the funds will support Egypt’s social protection project, Takafol and Karama, as well as initiatives related to water and agriculture.
Egypt has been actively pursuing asset sales to bolster the private sector and increase foreign currency reserves. In 2022, Egypt set a target to raise $10 billion annually over four years through private investment in state assets. Recently, Egypt successfully raised $35 billion by selling the development rights of the Ras El Hekma peninsula on the Mediterranean coast to the Emirati sovereign wealth fund ADQ.
The World Bank Group’s current operational portfolio in Egypt exceeds $8 billion, comprising $6 billion from the International Bank for Reconstruction and Development, $1.9 billion from the IFC, and $0.5 billion from the Multilateral Investment Guarantee Agency. This significant investment underscores the World Bank Group’s commitment to supporting Egypt’s economic development and addressing its pressing challenges.