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Egypt, classified as a Lower Middle-Income country, had a GDP per capita of US$ 3,512.6 in FY23 (July 2022¡ªJune 2023). The country possesses significant potential to leverage its existing manufacturing and services sectors, a large domestic market, and strategic geographic location as a gateway to Africa, Asia, and Europe. These factors can be harnessed to attract both foreign and domestic investments.

Egypt is pursuing macroeconomic stabilization and structural reforms, underpinned by the IMF Extended Fund Facility (EFF), large-scale UAE investment deal in Ras Elhekma, and development partners¡¯ financing including the World Bank and the European Union.

Notwithstanding the monetary tightening and exchange rate adjustment of March 2024 that helped ease the two-year-long foreign currency crisis, the escalation of the Middle East conflict continues to impact foreign income sources, especially the Suez Canal revenues. Further, scarring effects of the longstanding challenges that intersected with global shocks continue to manifest in key economic activities, notably the manufacturing, Suez Canal, and energy sectors.

Growth is expected to start a gradual recovery from an estimated 2.5 percent in FY24 (July 2023-June 2024) to 3.5 percent and 4.2 percent in FY25 and FY26, respectively driven by favorable base effects, as well as investment, notably that financed by the UAE deal. The budget deficit is forecast to widen from 3.6 percent of GDP in FY24 to 7.0 percent of GDP in FY25, mainly due to the higher interest payments and the vanishing impact of the (one-off) Ras Elhekma transaction, before starting to decline thereafter, supported by fiscal consolidation. External financing requirements remain substantial, with maturing external debt and repayment of arrears to International Oil Companies. Further, the widened current account deficit may put pressure on foreign currency resources, especially if the Middle East conflict continues to cast a shadow on the economy.

Key factors to unlock productivity growth, exports, and job-creation include: (i) Reorienting the role of the state as an enabler of private activity. This is critical for fiscal and external sustainability; (ii) creating a conducive business environment; and (iii) addressing human development needs.

Last Updated: Oct 03, 2024

ľ¹ÏÓ°Ôº Group¡¯s lays out the World Bank¡¯s current strategy in the country.

The CPF aligns with the Government of Egypt¡¯s Sustainable Development Strategy, ¡°Egypt Vision 2030,¡± and the National Climate Change Strategy 2050.

The CPF builds upon a comprehensive set of World Bank analytics, including , , and .

The CPF works towards three high-level outcomes:

1. More and better private sector jobs: through supporting the creation of an empowering environment for private sector-led investments and job opportunities as well as creating a level playing field for the private sector.
2. Enhanced human capital outcomes: through supporting the provision of inclusive, equitable and improved health and education services as well as effective social protection programs.
3. Improved resilience to shocks: through strengthened macroeconomic management, and climate change adaptation and mitigation measures.

The CPF also aims to strengthen Egypt¡¯s role in regional integration through enhanced regional trade and greater connectivity in infrastructure, transport, energy, and labor. Through the CPF the World Bank will also continue to support Egypt¡¯s ambitions to be a leader for the climate mitigation and adaptation agenda in the region, following its presidency of COP27.

Additionally, the CPF integrates two cross-cutting themes¡ªgovernance and citizen engagement, and women¡¯s empowerment¡ª across programs.

The CPF is being  implemented jointly by the World Bank, the International Finance Corporation (IFC, a member of the World Bank Group), and the Multilateral Investment Guarantee Agency (MIGA, a member of the World Bank Group), building on the three institutions¡¯ current portfolios and adopting a flexible approach to lending. The CPF is being  supported through a financial envelope of US$7 billion in lending (US$1 billion per year from IBRD and about US$2 billion during the entire CPF period from IFC), in addition to guarantees from MIGA. Partnerships remain a crucial component of the strategy.

Last Updated: Oct 03, 2024

ľ¹ÏÓ°Ôº supports Egypt¡¯s development through lending, analytical work and advisory services with a focus on strengthening human capital, improving service delivery, building the country¡¯s resilience to shocks, and addressing climate change, as well as the impacts of macroeconomic shocks. Current projects include: 

• The "Generating Resilience, Opportunities, and Welfare for a Thriving Egypt" Development Policy Financing (DPF) operation with the Government of Egypt was approved in June 2024 for US$700 million. This budget support operation is designed to address Egypt's immediate economic challenges while advancing structural reforms aligned with the country¡¯s development priorities and national strategies. Specifically, it aims to enhance economic competitiveness and improve the business environment to foster private sector growth, strengthen macroeconomic and fiscal resilience, and support Egypt's green transition. This DPF is the first in a series of three programmatic operations. Key reforms under this operation include: strengthening the governance framework for state-owned enterprises by establishing a legal foundation for the State Ownership Policy; empowering the Egyptian Competition Authority to combat anti-competitive mergers and acquisitions; enhancing domestic revenue mobilization through accurate payroll tax assessments; reducing losses in electricity distribution; improving climate adaptation capacity and the financial sustainability of the water and sanitation sectors; scaling up renewable energy; and creating a regulatory framework for a voluntary carbon credit market. This operation will contribute to creating sustainable jobs and building resilience to climate change, both of which are crucial for the prosperity of Egypt's citizens, particularly the poor and vulnerable.

• The Bank has supported the government in designing and scaling up social safety net programs under  (US$900 million, including additional financing). The project supported government efforts to enhance the efficiency and effectiveness of the Takaful and Karama Cash Transfer Program (TKP), implemented by the Ministry of Social Solidarity (MOSS). It also piloted productive inclusion and graduation models in eight governorates under the "FORSA" program, to support the transition from protection to production and link beneficiaries to economic opportunities through asset transfer, wage employment, and training, with a focus on women and youth; 26,321 beneficiaries received self-employment and wage employment packages under this pilot. The support continues through a new US$500 million loan under the ¡°¡±, which became effective on 13 December 2023 and aims to continue to support efforts to increase coverage and effectiveness of TKP, expand its social registry to support effective targeting of social protection programs, and enhance access of the poor and vulnerable to economic inclusion opportunities through microcredit. Thanks to TKP¡¯s adaptive shock responsive social registry and strong delivery system, the program efficiently expanded its coverage in recent years in response to consecutive shocks such as the COVID-19 pandemic, the repercussions of the war in Ukraine, and the devaluation of the Egyptian pound, while the benefits provided increased by 55 percent between March 2023 and February 2024. As of June 2024, 5.3 million households (around 22 million citizens) are receiving cash transfers: 4.66 million households supported though MOSS, including 230,000 households who are being transferred to TKP from the old Daman, and 600,000 households covered by the National Coalition for Community Development Work. 

• (US$500 million) is improving local government capacity for quality infrastructure and service delivery to citizens and local firms in four of Egypt¡¯s poorest governorates, Qena, Sohag, Minya and Assiut, which have a combined population of around twenty million inhabitants. Citizens in 20 cities, 400 villages and 2970 hamlets have benefited from the expansion and improvement of municipal services and infrastructure. This includes water and sanitation, local markets, vocational areas, local roads, public spaces, and solid waste management. More than 50,000 businesses have benefited from upgraded infrastructure in zones and upgraded Government to Business services in Program Governorates and developing 12 clusters focusing on handicrafts, agribusiness, and other endogenous clusters in Upper Egypt with an average of 85% level of satisfaction.  8.2 million citizens, 48% of them women, have benefitted from 5,130 completed/underway infrastructure projects in the program. The program has been following performance and competitiveness grants to incentivize the performance of the governorates under different technical areas such as asset management, own-source revenues, participatory capital investment planning, industrial zones upgrading, government to business services and cluster competitiveness initiatives, along with cross-cutting themes (fiduciary and social & environmental safeguards). The Upper Egypt Local Development Program exerted considerable efforts towards replicating and scaling up its best practices and reforms not only to the rest of the Upper Egypt governorates but also to the other 27 governorates across the country.

• 's (US$500million) completion of the emergency response measures played a crucial role in addressing the country¡¯s shortfall in wheat imports and ensuring the Bread Subsidy Program's uninterrupted operation for the benefit of the poor and vulnerable. The procurement of approximately 1.1 million metric tons of wheat was achieved through a series of competitive tenders, reflecting a commitment to efficiency and timeliness. The project also supports national efforts to reduce waste and losses in the wheat supply chain by upgrading, expanding and establishing climate-resilient wheat silos. In cooperation with the Ministry of Supply and Internal Trade, the project began expanding and rehabilitating seven grain silo storage complexes strategically located near road, rail and river transportation routes in Upper Egypt. Moreover, in collaboration with the Ministry of Agriculture and Land Reclamation, progress is being made in seed multiplication and production capacity enhancement at the Sakha Agricultural Research station. Additionally, 10 agricultural service centers in ¡®Decent Life¡¯ initiative Villages in Upper Egypt will be upgraded , with equipment , including agro-meteriological portable stations.

•  (US$850 million, with US$300 million co-financing from the Asian Infrastructure Investment Bank), aims to bring sanitation access to about 1.73 million people in highly polluted villages and satellites of Sharkia, Dakahliya, Beheira, Menoufia, Damietta and Gharbia governorates in the Nile Delta, through a complete sanitation chain from household connections connected to a functioning  wastewater treatment facilities. The program empowers and incentivizes local water and sanitation companies (WSCs) to deliver effective, inclusive and accountable decentralized services. It is laying the groundwork for sustainable development of the sector by supporting the development of its water and sanitation sector strategy, implementation of information systems, and supporting regulatory and tariff reforms. The Parent program closed on December 31, 2023, achieving the target of 167,000 household connections. Under Result Area 2: Improved operational systems and practices of water utilities, Performance Improvement Action Plans covering twelve Key Performance Indicators were consistently achieved by the three WSCs. There has been good progress on the sector reform agenda in the following areas: (i) wider adoption of the standard operating procedures (SOP) for land acquisition, through an inter-ministerial Memorandum of Understanding; (ii) issuing of a decree for the adoption of a unified information system; (iii) issuing of a decree for the development of a financial model for sustainable cost recovery; (iv)  use of the International Benchmarking Network for Water and Sanitation Utilities as the Water and Sanitation Sector¡¯s information system for monitoring sector progress; and (v) approval of the business plan and SOPs for Egyptian Water Regulatory Authority. Good progress has also been made on the development of the National Water and Sanitation Sector Strategy; a draft version is under discussion with stakeholders in the sector. 

• (US$1 billion, including Additional Finance) aims to improve the affordability of formal housing for low-income households in Egypt and to strengthen the Social Housing and Mortgage Finance Fund¡¯s capacity to design policies and coordinate programs in the social housing sector. The program is a top priority for the Egyptian authorities, with a 63% disbursement ratio. Since program inception, over 580,000 subsidies have been delivered to low-income households across Egypt¡¯s 27 governorates.  This has contributed to greater social and youth inclusion: Over 23% of the beneficiaries are women, 70% are below the age of 40 and 18% are below the age of 30. In addition, 65% of beneficiaries are first time borrowers, having never engaged with a financial institution prior to the initiation of this program. The program is also piloting the inclusion of green building initiatives in social housing, with the aim of certifying 55,000 units as ¡®green¡¯ under national and international certification standards. So far, 25,000 units have been green certified under the national Green Pyramid Rating System (GPRS), in close collaboration with the IFC EDGE team.

•  (US$530 million) is designed to enhance healthcare services and address public health challenges in Egypt. Its objectives include improving healthcare service quality, boosting demand for health and family planning services, combating Hepatitis C, and providing a rapid response to crises or emergencies. Notably, the project backed the "100 Million Healthy Lives" campaign, which screened over 53 million individuals for Hepatitis C and other noncommunicable diseases, leading to the treatment of approximately 1.2 million Hepatitis C patients. Initiatives such as the National Community Health Worker Campaign, the Al Wissam Initiative, and the Visiting Doctors Program have been instrumental in raising the national contraceptive prevalence rate from 58% in 2018 to 66% in 2022. The project also supports secondary and tertiary level initiatives to improve the quality and timeliness of surgical care, as well as address shortages of medical goods and supplies throughout Egypt.

• The  (US$400 million) was approved in June 2020. The project supports Egypt to implement the new UHIS, as envisioned in the Universal Health Insurance Law passed in 2018. This includes Phase I of its rollout in six governorates: Port Said, Suez, Ismailia, South Sinai, Luxor and Aswan. The governorates are home to about six million people, close to 6% of Egypt¡¯s total population.  As of January 2024, the program has been rolled out in four of the six Phase 1 governorates, enrolling over 3.1 million people, inclusive of over half a million vulnerable and poor population benefiting from Government subsidy on the UHIS program. A national quality accreditation standard has also been developed, and is being implemented, with over 140 public providers accredited and contracted to provide services.  

• In April 2019, the World Bank approved the  (US$200 million) which aims to create jobs and improve economic opportunities for Egyptians, with a focus on women and youth. This project provides a comprehensive package of financial (debt financing and equity investments) and non-financial support to traditional MSMEs (Micro, Small and Medium Enterprises), innovative startups, and high growth firms. It went into effect in January 2020. To date, the project has maintained and created more than 408,829 jobs and supported more than 199,619 beneficiaries ¡ª of whom 43% are women and 43% are youths. 

• The  (US$500 million) supports a major government effort to improve teaching and learning conditions in public schools, with a focus on: (i) improving the quality of kindergarten (KG) education; (ii) enhancing the capacity of teachers, supervisors, and educational leaders, and monitoring their teaching, mentoring, and leadership practices; (iii) the intensive use of education technology including alternative resources for teaching and learning; and (iv) the introduction of new, higher order thinking skills-driven secondary examinations, governing access to universities, as well as national assessments in grades 4 and 7. To improve school readiness, the project supported the Ministry of Education and Technical Education (MOETE) in developing a new quality assurance system for KG. The ministry has also administered baseline data collection to guide quality enhancement plans in an initial phase of 35 percent of KG. This is in addition to developing and accrediting new KG teacher training modules driven by KG diagnostic studies to improve KG teaching practices. In the area of student assessment, the MOETE developed and administered a new secondary examination system nationwide, driven by higher order thinking skills, and deployed the new item test bank and scoring software since the grade 10 cohort of 2018/2019. To improve the ministry¡¯s ability to track student learning in early grades, the MOETE developed and administered the grade 4 national assessment for literacy and numeracy twice; and the results of the 2021 and 2023 test are published on the ministry¡¯s website. This is in addition to developing and administering a similar national assessment in grade 7, also focusing on Arabic and mathematics, and the results are already posted on the ministry¡¯s website. To enhance teaching and learning ¨C more broadly ¨C the MOETE has developed performance standards for teachers, and also developed and made available curated resources through digital and TV educational channels to students and teachers in grades 4-12. The project also supports a high frequency pulse survey to guide strategic communication planning, drawing on stakeholders¡¯ views and perceptions of reform activities as well as monitor access and usage of alternative learning resources. Most recently, the ministry deployed a screening tool for struggling readers in early grades and the baseline results guided the development of enriching materials and teachers training. This approach to support foundational literacy is being piloted in Suez and Port Said.

• (US$440 million) was approved in March 2021, complemented by a US$241 million contribution from the Egypt National Railway (ENR) network. The project will modernize the railway signaling along the Alexandria-Cairo-Nag Hammadi corridor of the ENR and help improve safety at select stations and junctions using a safe systems approach, which will include gender, citizen engagement and disability considerations. The project will introduce reforms, using performance-based funding, in accordance with best international practice, to support ENR to deliver high quality services at a lower cost through the adoption of public service obligation and multi-annual infrastructure contracts. An estimated 1.4 million daily users of the railways will be able to rely on a safer and more reliable service. 

• The (US$400 million) was approved in September 2022, complemented by a US$ 598 million contribution from the Egypt National Railway (ENR) network. The project will improve the performance and support the decarbonization of the logistics and transport sectors in the Alexandria¨C6th October¨CGreater Cairo Area railway corridor. The project includes developing and adopting a transparent railway Infrastructure Access Charging scheme for the Egyptian railway network to attract private sector participation; developing a regulatory framework including identifying the detailed scope and responsibilities of a railway regulator and the associated governance framework; and identifying and developing additional rail©\friendly policies to increase traffic on the railway network.
  

• The?(US$200 million) was approved in September 2020 and became effective on June 9, 2021. The project will contribute to reducing air pollution and climate change emissions in Greater Cairo. Activities are focused on building responsiveness and resilience into institutions and systems, with an emphasis on the waste sector (treating and minimizing contaminated waste and establishing properly managed final disposal facilities) and reducing air and climate emissions from the public transport sector. The project aims to support an integrated climate and air quality management plan for Greater Cairo, the construction of an integrated waste management facility and the financing of a demonstration low/no emission e-bus transport fleet and activities related to running it. These are expected to reduce the burden of air pollution on health and on the economy.???In addition, the government of Egypt has received an additional grant (US$ 9.13 million) from the Global environment Facility to the Greater Cairo Greater Cairo Air Pollution Management and Climate Change Project for the Improved Management of E-Waste and Healthcare Waste for Reduction of uPOPs Emissions. It became effective on August 20, 2024.

Last Updated: Oct 03, 2024