The World Bank Group has made public its plan to support Egypt with $6bn over three years as the African country struggles with a foreign currency crunch, a wide budget, and balance of payment deficits.
According to Reuters, the World Bank Group said $3bn would go to government programs and the remaining $3bn would go to the private sector all subject to the group’s board approval.
The World Bank announcement followed Egypt’s signing of a loan agreement on March 6 with the International Monetary Fund (IMF) which increased IMF support to Egypt by $5bn and an announcement on Sunday of an $8.1bn financing by the European Union.
$3bn of the World Bank financing would be distributed to the government and its programs over three years.
Egypt country director Stephane Guimbert told Reuters that the first $1bn from the World Bank is expected to arrive by June.
- “Some significant part of that will go to budget support. and then we have a range of programmes on climate, on SMEs (small and medium-sized enterprises), etc.,” Guimbert said.
The remaining $3bn would be facilitated through the World Bank Group’s private sector arm, the International Finance Corporation (IFC).
This $3bn would be raised through equity and loans and would be made up partly by funds mobilized from other investors.
Mr. Guimbert explained the type of companies that would benefit from the World Bank Program.
- The World Bank programme will focus in part on helping state-owned enterprises “that are not sold, that remain within government control, and the way they are managed, including leveling the playing field with the private sector” Guimbert said.
Additionally, The World Bank funds will also help finance Egypt’s Social protection project as well as water and agricultural programme.
The World Bank Group said its current operational portfolio in Egypt is more than $8 billion, comprising $6 billion from the International Bank for Reconstruction and Development, $1.9 billion from the IFC, and $0.5 billion from the Multilateral Investment Guarantee Agency.
What to Know
- Financially struggling Egypt has been selling assets to boost the private sector and raise scarce hard currency setting a target in 2022 to raise $10bn annually for four straight years through private investments in state assets.
- For example, Egypt last month raised $35bn by selling the development rights of the Ras El Hekma peninsula on the Mediterranean coast to the Emirati sovereign wealth fund.
- Nairametrics already reported that Egypt also recently received an $8.1 billion (7.4 billion Euros) funding package from the European Union to help its ailing economy.