Like many other countries, Egypt is facing headwinds from the global consequences of the war in Ukraine, the lingering repercussions of the Covid-19 pandemic, and tightening monetary conditions globally, with all these threatening to exacerbate pre-existing challenges, according to Marina Wes, World Bank country director for Egypt, Yemen, and Djibouti.
The World Bank expects Egypt’s GDP growth rate to slow to 4.8 per cent in the current fiscal year 2022-23, down from 6.6 per cent last year. Nevertheless, growth is forecast to pick up over the medium term as the repercussions of global developments start abating and the country pushes ahead with macroeconomic stabilisation and structural reforms, Wes said.
The Egyptian economy is large and diversified, and the country can boost its overall growth rate, she said, adding that “in order to achieve growth that is inclusive and job-rich, it is key to pursue structural reforms to unleash the private sector’s potential, in particular in higher value-added and export-oriented activities.”
This, she said, will require the elimination of potential distortions in the foreign-currency market, in addition to implementing measures that enhance the overall business environment.
“Fiscal consolidation remains crucial, notably through enhancing revenue mobilisation and streamlining expenditures in order to restore the downward trajectory of public debt and allocate adequate funds for critical social spending,” Wes noted.
She recommended simultaneous reforms, including sustained fiscal consolidation combining streamlining public expenditures and increasing revenues; fiscal and debt transparency to support proactive steps to better monitor, report, and contain wider public sector financing requirements beyond the central government; sustained growth to help ensure favourable debt dynamics; and broader structural reforms that can improve the governance of the public sector and reduce its fiscal burdens.
The World Bank is currently finalising its new Country Partnership Framework (CPF) that will cover the period between the 2023 and 2027 financial years. According to Wes, the new CPF aims to achieve three high-level objectives: more and better private sector jobs; stronger human capital outcomes; and improved resilience to shocks.
The bank’s project pipeline will be confirmed upon agreement with the government on priority operations, she said, which include supporting the expansion and enhancement of the country’s social safety nets, supporting the implementation of the government’s Nexus of Food, Water and Energy (NWFE) Strategy, and supporting private sector development.
The World Bank approved a $500 million project in June 2022 that supports Egypt to secure wheat in the short term, while supporting its capacity to safely expand strategic wheat storage over the medium term. Over the longer term, the project supports the expansion of local climate-resilient wheat seed varieties.
The bank also supports Egypt’s two climate-related products, the NWFE Platform and the Sharm El-Sheikh Guidebook for Just Financing. The NWFE integrates nine high-priority projects for adaptation and mitigation, bundled around the three main pillars of water, food, and energy and selected through a prioritisation process led by the government.
The guidebook identifies the challenges caused by climate change to leverage public and private sector finance to mitigate and adapt to them. Both initiatives are due to be launched at the COP27 Climate Conference in November, Wes said.
She said that the World Bank is the biggest multilateral funder of climate investments in the developing countries, adding that it delivered a record $31.7 billion to help countries address climate change in the 2022 fiscal year. “This is a 19 per cent increase from the $26.6 billion all-time high in financing reached in the previous fiscal year,” she said.
It is expected to have strong participation at the COP27. “We will bring technical experts from around the world to share our knowledge and experience in supporting clients as they tackle mitigation and adaptation challenges on the ground,” she said. In addition, the bank will showcase its work and its clients’ experiences on delivering climate action at scale at a first-ever World Bank Group Pavilion.
Wes stressed that the World Bank welcomes Egypt’s focus on adaptation and other issues that have not always received the attention they deserve at earlier summits, plus the strong focus on Africa at the COP27, which has been hard hit by climate change.
“We commend the COP27 presidency’s efforts in articulating its vision to strengthen the voice of the African continent in the negotiations, especially representing the vast adaptation and resilience needs of the countries most at risk,” Wes said.
*A version of this article appears in print in the 20 October, 2022 edition of Al-Ahram Weekly.