World Bank Greenlights $700M Development Finance For Egypt

June 30, 2024


The World Bank has earmarked $700 million in Development Policy Financing (DPF) for Egypt, as part of a larger $6 billion commitment until 2026. This funding aims to bolster Egypt’s shift towards greater private sector participation, strengthen macroeconomic and fiscal resilience, and foster environmentally sustainable growth, according to a statement released in June.

The “Generating Resilience, Opportunities, And Welfare for a Thriving Egypt” DPF is designed to help Egypt “address short-term economic challenges while advancing the next generation of structural reforms to level the playing field to unleash private sector growth; build macroeconomic and fiscal resilience; and facilitate Egypt’s green transition, including by scaling up renewable energy and increasing efficiency in the electricity, water and sanitation sectors,” the World Bank has said.

The Egyptian government is implementing significant economic and structural reforms to foster a more competitive economy driven by the private sector and sustainability, according to the Minister of International Cooperation and Egypt’s Governor at the World Bank, Rania A. Al-Mashat.

The recently approved DPF forms a component of the World Bank Group’s planned three-year $6 billion initiative for Egypt, announced in March 2024. This program aims to stimulate private sector expansion, facilitate job creation, improve human capital outcomes, enhance climate resilience, and bolster economic management.

“Creating good, sustainable jobs and building resilience to climate change are critical for the current and future prosperity of Egypt’s citizens – especially the poor and vulnerable. Reforms supported by this operation are an important step towards a more sustainable, inclusive economy,” said Stephane Guimbert, World Bank Country Director for Egypt, Yemen & Djibouti.

Egypt GDP growth

Recently, the World Bank maintained its projections for Egypt’s real Gross Domestic Product growth at 2.8% for 2024 and 4.2% for 2025, unchanged from April’s forecasts, with an expected increase to 4.6% in 2026, according to its Global Economic Prospects report issued in June.

The report also kept Egypt’s real GDP projections steady for the current fiscal year 2023/2024, as well as for the upcoming fiscal years 2024/2025 and 2025/2026. These forecasts are influenced by several factors, including reduced manufacturing activity due to import restrictions, decreased operations in the gas sector, lower shipping activity through the Suez Canal, slower investment due to limited private sector credit, and a subdued recovery in tourism linked to regional conflicts.

However, the report attributed the anticipated GDP growth recovery in fiscal years 2024/2025 and 2025/2026 to the impacts of the $35 billion Ras El-Hekma deal signed with the UAE in February, which involves converting $11 billion of UAE deposits at the Central Bank of Egypt into local investments.

Regarding the Egyptian pound, the report projected that exchange rate depreciation would enhance the country’s net exports, thereby contributing significantly to GDP and increasing foreign currency inflows into Egypt.