World Bank Approves $700M to Support Egypt's Economic Reforms and Green Transition

The DPF aligns with the World Bank’s Egypt Country Partnership Framework for FY2023-FY2027, which prioritizes private sector development.

The World Bank has announced US$700 million in Development Policy Financing (DPF) for the Government of Egypt to enhance private sector participation, bolster macroeconomic and fiscal resilience, and promote greener growth. The initiative, titled "Generating Resilience, Opportunities, And Welfare for a Thriving Egypt," aims to address Egypt's short-term economic challenges while advancing structural reforms to foster private sector growth, build resilience, and facilitate Egypt's green transition.

The DPF will support reforms that level the playing field for the private sector, improve macroeconomic stability, and enhance efficiency in the electricity, water, and sanitation sectors. The project will scale up renewable energy and improve climate adaptation capacities.

"The Government of Egypt is undertaking ambitious economic and structural reforms aimed at creating a more competitive, green, and private sector-led economy. Through this budget support instrument, the DPF with the World Bank helps advance policy reforms on three of its top national priorities: building macro-fiscal resilience, enhancing economic competitiveness and improving the business environment, and supporting the green transition. Our longstanding partnership with the World Bank underpins the realization of Egypt's development and reform efforts," said Dr. Rania A. Al-Mashat, Minister of International Cooperation and Governor of Egypt at the World Bank.

This DPF is the first in a series of three operations designed to advance key reforms, including:

Strengthening the governance framework for state-owned enterprises by creating a legal basis for the State Ownership Policy.

Empowering the Egyptian Competition Authority to combat non-competitive mergers and acquisitions.

Enhancing domestic revenue mobilization through accurate payroll tax assessments.

Reducing electricity distribution system losses.

Improving climate adaptation capacity and financial sustainability in the water and sanitation sectors.

Scaling up renewable energy.

Establishing a regulatory framework for a voluntary carbon credit market.

The World Bank Group's 3-year $6 billion support program for Egypt, announced in March 2024, aims to spur private sector growth, create jobs, enhance human capital outcomes, foster climate resilience, and strengthen economic management. Stephane Guimbert, World Bank Country Director for Egypt, Yemen & Djibouti, emphasized the importance of these reforms, stating, "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."

The DPF aligns with the World Bank's Egypt Country Partnership Framework for FY2023-FY2027, which prioritizes private sector development. It is informed by recent World Bank Group analytical work on Egypt, including the Country Private Sector Diagnostic and the Country Climate and Development Report. Of the $700 million in the current DPF, $200 million is contingent on complementary financing from development partners.

The new DPF is also aligned with Egypt's development priorities and national strategies, including the Sustainable Development Strategy Vision 2030, the State Ownership Policy, the National Climate Change Strategy 2050, and the Nexus of Water Food, and Energy. This support is expected to play a critical role in Egypt's journey towards a more sustainable and prosperous future.