The World Bank has announced an increase in its development funding package for Egypt to $800 million, alongside a British guarantee of $200 million. This initiative is part of efforts to support the Egyptian economy in facing regional repercussions stemming from the Iran war, while also promoting economic reforms and job creation.
Stefan Jimbert, a World Bank official, stated that the decision was made in response to the "uncertainty in the region and the shock that Egypt, like other countries, is facing due to the war." He clarified that the funding comes with favorable terms, including an interest rate of approximately 6% and a repayment period of up to 30 years, in addition to a grace period before repayments begin.
Details of the Funding Package
Jimbert explained that the new package aims to support the private sector, enhance macroeconomic stability, and promote green transformation. The World Bank's Board of Directors approved the funding on Friday as part of the second phase of a three-phase financing program, following the approval of the first phase in June 2024, with the third phase expected to be implemented next year.
He noted the anticipated participation of other international financing institutions, including the Asian Infrastructure Investment Bank, in providing parallel financing to support the program.
Background & Context
In related remarks, Jimbert confirmed that private investment in Egypt has risen to approximately 6% of GDP, compared to 4% previously, yet it remains below the levels of similar economies where private investments exceed 20% of GDP. He also mentioned that the World Bank continues to advise the Egyptian government to enhance foreign direct investment flows.
He added that the Egyptian economy has the potential to achieve an annual growth rate of up to 6% in the medium term, provided that economic stability is maintained and structural reforms are implemented, which could create around 2 million job opportunities annually, compared to approximately 600,000 jobs currently.
Impact & Consequences
Regarding social protection, Jimbert affirmed that the Takaful and Karama program provides more targeted support to the most needy families compared to traditional support programs, emphasizing the importance of expanding reliance on it during periods of economic crises.
On another note, the Ministry of Planning, Economic Development, and International Cooperation announced that the Egyptian economy recorded a growth rate of 5% during the third quarter of the fiscal year 2025-2026, compared to 4.8% during the same period last year.
Regional Significance
Ahmed Rostom stated that the growth rate exceeded expectations despite geopolitical tensions affecting supply chains and oil prices, explaining that non-oil sectors led the growth, with the Suez Canal Authority achieving a growth rate of 23.6%, alongside the restaurant and hotel sector at 8.3%, and the construction sector at 5.6%.
The minister also pointed out the continued recovery of the non-oil industrial sector, which recorded a growth rate of 2.1%, driven by increased production in several manufacturing industries, including wood, vehicles, chemical products, and pharmaceuticals.