World Bank greenlights USD 1 bn in concessional financing

The World Bank Group approved USD 1 bn in concessional financing for Egypt under the second phase of its Growth program, tied to structural reforms targeting state ownership, debt markets, and private-sector mobilization, it said in a statement (pdf).

The package includes USD 800 mn from the World Bank and a USD 200 mn credit guarantee from the UK government. “Given the uncertainty in the region and the shock facing Egypt like other countries … we agreed with the authorities to increase from USD 500 mn to USD 800 mn,” World Bank Country Director Stephane Guimbert said during a media briefing attended by EnterpriseAM.

How the program works: This is the second tranche of a three-part Development Policy Financing (DPF) program launched with the IMF and the European Union in June 2024. Unlike project financing, DPF disburses directly into the state budget once agreed-upon reforms are enacted. “It’s essentially supporting a set of reforms,” Guimbert said. The reforms tied to this tranche include state-owned enterprise governance, domestic debt market efficiency, fair competition rules, and the automatic enrollment of Takaful and Karama beneficiaries in the Universal Health Ins. System, the statement reads.

Mobilizing private capital: The bank is in talks with the government on mechanisms to draw private investment into desalination, water, and electricity infrastructure — the third and final pillar of the operation, due next year. “We’re thinking with the Planning and Finance ministries how to create a facility that would give confidence to private investors to finance those sectors,” Guimbert said. “Investors will need clearer visibility on the government’s long-term plans and the financial sustainability of utilities to reduce reliance on sovereign guarantees,” he added.

Where growth could come from: Egypt can sustainably grow at around 6% a year over the medium term, up from roughly 4% in recent years — a rate that generated only around 600k jobs annually, Guimbert said. “Growth at 6% or higher could create as many as 2 mn jobs a year,” he argued. The bank sees tourism, agriculture and agribusiness, healthcare, renewable energy, infrastructure, and manufacturing as Egypt's highest-potential sectors, capable of driving exports, improving energy security, easing food-price pressures, and creating jobs outside Cairo.

More funds coming our way: The Asian Infrastructure Investment Bank is expected to provide parallel financing tied to the same reform agenda, the World Bank said.