In a report issued in January, the World Bank has lowered its forecast for GDP growth in Egypt from 4.2% in FY 2014/2015, to 3.8% in the current fiscal year, a drop by 0.7 percentile points from its prior prediction in June 2015.
In a report on the prospects of the global economy, the World Bank predicted the following for Egypt:
- A slow GDP growth rate;
- Weakness in the tourism sector following the downing of a Russian aeroplane in Sharm El-Sheikh, in late October;
- A continuation of a shortage in foreign currency
- An additional round of currency devaluation
In December 2015, the World Bank Group endorsed a new Country Partnership Framework for 2015-2019 “to support Egypt during a critical period of economic and social transformation”.
“Priorities include measures to support fiscal consolidation, reorient public spending towards growth and social services, promote energy security, develop a targeted social safety net, strengthen institutional arrangements to improve service delivery in rural sanitation, and modernize public administration,” the World Bank said at that time.
World Bank Country Director for Egypt, Yemen and Djibouti Asad Alam said the international institution will focus on meeting Egypt’s needs to create more jobs by improving governance mechanisms and promoting social inclusion.
Under this programme, Egypt acquired approval for two loans from the World Bank and the African Development Bank (AfDB), valued at $4.5bn – with $3bn to come from the World Bank and $1.5bn from AfDB – and expected to be disbursed over three years.
These funds come in the form of soft loans at an interest rate of 1.68%, with a repayment period of 35 years and a grace period of five years.
The current financing portfolio of the World Bank in Egypt includes 28 projects at a total commitment of $6.47bn.
The World Bank finances projects in the sectors of social safety nets, energy, transport, water and sanitation, agriculture and irrigation, housing, and health, as well as supporting employment-intensive projects and providing financing for micro and small enterprises.