Generating Resilience, Opportunities, and Welfare for a Thriving Egypt (GROWTH)

Egypt stands at an inflection point in its social and economic development journey. While reforms implemented since 2016 had helped improve economic buffers, economic imbalances remained. These imbalances were exacerbated by external shocks leading to capital flight in March 2022 as investors became concerned about the sustainability of policy settings. The revised International Monetary Fund (IMF) program, as part of a collective development partner effort that includes this proposed operation has helped address immediate, short-term financing needs and restore confidence. However, the necessity for significant medium-term reforms to engender long-term recovery underscores the imperative to realign structural reform priorities. This US700 million dollars operation is the first in a programmatic series of three single-tranche development policy financings (DPFs) to support the Government of Egypt (GoE) in addressing current, longer-term economic challenges and advancing a next generation of reforms. The objective is to shift toward more private sector participation, better macroeconomic and fiscal resilience, and a greener growth trajectory that are essential for a reorientation to a more competitive economy capable of sustainably reducing poverty and increasing shared prosperity. Commitment to these objectives is clear in Egypt’s Sustainable Development Strategy Vision 2030 and National Climate Change Strategy (NCCS) 2050 which center around Green, Inclusive and Resilient Development (GRID). In addition, the Egyptian State Ownership Policy (SOP) regulates the state’s ownership and participation in economic activities, aiming to enhance the private sector’s role in the economy. The United Kingdom has expressed interest in extending a guarantee to IBRD (US200 million dollars), which will expand the initially planned US$500 million IBRD loan amount, bringing the total operation to US700 million dollars. The Asian Infrastructure and Investment Bank (AIIB) also intends...