In an interview on the sidelines of the Egypt-EU Investment Conference 2024, taking place 29-30 June in Cairo, Bjerde told AO that a stable macroeconomic environment is critical to protect families from inflation, especially poorer households.
She stressed that Egypt has enormous economic potential based on its location, large market, and rich history.
“But to create the millions of jobs needed, especially for young people and women entering the labour force, the country needs to create an enabling environment for private sector development,” added Bjerde.
“This requires redefining the state's role in the economy, encouraging fair competition in the markets to allow more efficient imports and exports, and delivering quicker and more predictable commercial justice,” she stressed.
She added that the WB has recently committed an additional $700 million in Development Policy Financing to Egypt to support such reforms.
Human development is key
Bjerde praised Egypt's policies on human development, stressing that people are a country’s most valuable asset.
She added that education and health sectors are crucial drivers not only of development but also economic growth, particularly for women.
The World Bank has been a steadfast partner to Egypt in efforts to reform the education and health systems for almost a decade.
This included improving teaching and learning outcomes in public schools and rolling out health insurance nationwide, explained Bjerde.
Support to health initiatives
“The World Bank has also provided extensive technical and financial support in the screening and elimination of Hepatitis C and we will continue our efforts to improve access to health and family planning services nationwide,” said Bjerde.
She added that they are glad to see how Egypt is leveraging the Takaful cash transfer program to promote health, nutrition, and education, especially for young children.
“But, there’s still room to invest more and better in the human development sectors, including a greater focus on early childhood development and nutrition, skills development and technical and vocational training, and health systems and service delivery.”
Three goals
Bjerde explained that the World Bank Group's strategy for Egypt was developed together with the government and focuses on three goals: creating more and better private sector jobs; enhancing human capital outcomes; and improving resilience to shocks.
“Promoting women’s empowerment is an important cross-cutting theme in this strategy,” she said.
"We know that a robust and competitive private sector is critical for Egypt's future success, and I am glad to be attending the EU-Egypt Investment Conference, which will showcase the reforms Egypt has been undertaking to boost private sector investment.
“We are actively working with the government to support policy reforms and stimulate private sector activity, including through the $700 million Development Policy Financing I mentioned earlier. This financing is designed to help Egypt with three critical policy priorities: more private sector participation, better macroeconomic and fiscal resilience, and a greener growth trajectory," she said.
She explained that the World Bank will provide a $6 billion aid package for Egypt over the next three years with half of this package is designed to support the government's economic reform, fiscal consolidation, development, and climate policies, while the other half will focus on direct private sector support.
"We are also proud of helping Egypt build a more sustainable and inclusive economy by supporting small and medium-sized enterprises, creating jobs and promoting entrepreneurship, especially for women.”
“During my visit, I will meet with some of Egypt’s most promising young female entrepreneurs who benefitted from World Bank support. They are the future of Egypt," she added.
State of the global economy
Bjerde said that after several years of overlapping negative shocks, the global economy is stabilizing.
“Our latest projections suggest that global growth is expected to reach a slightly faster pace this year than previously expected, mainly because of the solid ongoing expansion of the US economy.”
“Overall, global growth is projected to hold steady at 2.6 percent this year, despite geopolitical tensions and high interest rates. It is expected to edge up to 2.7 percent in 2025-26 alongside modest expansions of trade and investment.”
Despite these improvements, notable challenges remain, noted Bjerde.
“For example, while financial conditions in emerging market and developing economies, or EMDEs, have become less restrictive, about 40 percent of EMDEs remain vulnerable to debt-related stress.”
“In short, the current pace of global growth is expected to remain insufficient for progress on key development goals.”
Central banks and interest rates
Bjerde said central banks across major advanced economies are expected to gradually lower interest rates this year. But the level of real interest rates is set to remain a headwind to economic activity, investment, and employment in the near term.
In developing economies, borrowing costs continue to be high and this is hurting investment and employment. For countries like Egypt, which have relied on debt to fund major public investment programs, this is particularly challenging.
If inflationary pressures endure for longer than currently expected, interest-rate cuts may be fewer or postponed. That could hurt global growth, investment, and employment in developing economies.
Crises and lessons
On the impact of global crises on financing priorities, Bjerde said: “The COVID-19 pandemic taught us many lessons but perhaps the most important one is that we cannot think of eradicating poverty without caring about climate, health care, food insecurity, and fragility.”
“These challenges are intertwined. This is why the World Bank Group has a new vision and mission to create a world free of poverty on a livable planet. We were already working on poverty alleviation, but the livable planet part is new: it refers to a planet where you can breathe the air, drink the water, and access education and health care.”
“For example, we know that climate change affects billions and with severe implications, especially for agricultural productivity and food security. This is a key reason why we are committed to protecting the most vulnerable – including in Egypt through our work with the government on the flagship Takaful and Karama program, the largest cash transfer program in the Middle East and North Africa region, which covers over 5 million families and more than 22 million citizens.”
At the same time, a shift toward a green economy can also be an opportunity, especially for a country like Egypt which has massive opportunities for green energy, she said.
According to Bjerde, the WB Group is the world’s largest multilateral provider of climate finance for developing countries. Overall, their lending for climate has significantly increased year on year, reaching a record high of $38.6 billion for the last fiscal year. And they have the ambition to put 45 percent of our annual financing commitments into the climate in 2025.
Benefits of AI
“On artificial intelligence (AI) techniques, I mentioned that the introduction of innovative technologies often expands job opportunities and gives rise to novel and better-paid occupations,” said Bjerde.
“More recently, we’ve seen a surge in AI-related job vacancies. In Latin America, half of the 20 fastest-growing skills (including AI) are linked directly to technological advancements.”
“In India, the demand for AI-related skills has been growing exponentially since 2016, and these roles offer substantially higher wages than other white-collar service jobs.”
“That said, it’s clear that despite many of the employment benefits AI can offer, it risks widening existing divides. This is why we are supporting countries to harness this transformative force in a way that helps create sustainable and inclusive growth and lays a stronger groundwork for the future. This includes support for building digital infrastructure, developing homegrown IT industry and AI firms, accelerating AI adoption in government, and skills development to advance AI research.”
Bjerde said Egypt, a country with a vibrant startup ecosystem, is well-positioned to harness the potential of AI.
“In recent years, Egypt has embarked on a comprehensive digital transformation journey, including investments in digital infrastructure, digital literacy and skills, and emerging technologies like AI. Our team is supporting the Ministry of Communications and Information Technology to drive this digital transformation forward.”
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