World Bank approves $360 mln loan to support Egypt’s second wave of reforms

Doaa A.Moneim , Thursday 28 Oct 2021

The World Bank’s Board of Executive Directors has approved a $360 million Development Policy Financing (DPF) loan for Egypt aiming to support the country’s second wave of economic reforms and enhance its prospects for sustainable and inclusive growth, the World Bank (WB) announced on Thursday.

The World Bank
The World Bank. Reuters

The loan has been approved under the “Egypt Inclusive Growth for Sustainable Recovery” Programme the WB launched with the aim of supporting Egypt’s second wave of structural reforms by concentrating on creating jobs and providing an inclusive enabling environment for the private sector to lay the basis for a sustainable recovery.

The WB also states that the Asian Infrastructure Investment Bank is considering parallel financing for the operation of the same amount using the same package of policy reforms agreed on with the WB in order to provide further support achievement for Egypt’s development objectives.

The programme strategically addresses some of the long-term structural issues impacting growth through its focus on three thematic pillars, including enhancing Egypt’s macro-fiscal sustainability, enabling private sector development in the domestic market, and fostering women’s economic inclusion, according to the WB.

The first pillar supports improving the management of the state-owned enterprises through enhanced transparency and reporting.

It also fosters debt transparency and debt management by introducing the regular publishing of a wider range of domestic and external debt data. This pillar also promotes and empowers a greener and more sustainable economic recovery through the issuance of green bonds.

The second pillar builds on Egypt’s first wave of reforms and supports digital and financial inclusion, the streamlining and automation of trade facilitation, and a modernisation of bankruptcy processes that aims to improve Egypt’s competitiveness and private sector job creation.

It also targets strengthening the regulatory framework for private sector participation in waste management, which provides a basis for greener and more inclusive development in the sector.

The third pillar centres on legislative and regulatory reforms that promote female participation in the labour force and supports Egypt’s government efforts to address gender-based violence.

It includes steps to remove restrictions on female participation in sectors and limitations on working hours and supports the government’s adoption of a national code of conduct that promotes safe and decent transportation for women in railways.

The bank said that Egypt’s first wave of macro-economic reforms stabilised the economy and allowed the country to enter the global COVID-19 crisis with greater resilience and improved fiscal and external accounts, adding that Egypt has remained one of the few countries that have maintained positive growth during the ongoing COVID-19 crisis.

It also noted that the reform programme Egypt has implemented since 2015 as well as the quick action on fiscal and monetary measures to streamline the effect of the pandemic on firms and households have supported Egypt’s economy during the crisis, stressing that there are significant steps that have been taken to address the country’s long-term structural challenges that are helping with the pandemic recovery.

Meanwhile, Egypt’s Minister of International Cooperation Rania Al-Mashat stated that Egypt’s structural reform policies are integral to the state’s efforts to accomplish a sustainable and resilient economic recovery that enables the economy to weather future shocks.

“The WB’s new operation will support our efforts to maintain the reform momentum and achieve the milestones necessary for inclusive growth,” she added.

Additionally, Marina Wes, the WB’s country director for Egypt, Yemen, and Djibouti stated that the bank is proud to support Egypt’s endeavours to build back better through the new programme.

“One of the key objectives of this operation is making Egypt’s growth more inclusive and more resilient to future shocks, by addressing long term structural challenges and recognising the pivotal role of women in the country’s economic growth,” Wes explained.

In response to the harsh impacts of the pandemic, the International Monetary Fund (IMF) provided Egypt ­— from June 2020 through June 2021 — with about $8 billion in loans under the Rapid Financing Facility and the Stand-By Arrangement instruments to support the country’s second wave of reforms and to provide the required liquidity to meet the local market’s needs amid the pandemic.

Egypt’s first wave of reforms was also backed by a three-year-IMF programme with a total loan of $12 billion, which ended in July 2019.

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