The World Bank Vice President for the Middle East and North Africa, Ferid Belhaj told Reuters that the World Bank seeks to support Egypt’s private sector with $1 billion in new funding, part of a second phase of support that follows two years of painful economic reforms.
Egypt floated its exchange rate and cut subsidies, triggering steep inflation that has since eased. The funding is in addition to the $3.15 billion of World Bank budget support provided to the country since 2015.
In an interview with Reuters on the sidelines of an Africa business forum in the Egyptian resort of Sharm el-Sheikh, Belhaj said “this is an economy that is now standing on its two feet after a few years of heavy, extremely daring economic reforms. The economy’s standing, now it needs to walk, and we believe that the private sector is really the driver”.
Since Egypt began implementing a reform program drawn up with the International Monetary Fund (IMF) in 2016, the country’s macro-economic indicators have improved, but the economy remains fragile.
The reforms have strained ordinary Egyptians, tens of millions of whom live under the poverty line. An estimated 700,000 people join the labor market each year, one of the challenges the World Bank support is meant to address.
Belhaj said “we have engaged with what one can call a second generation of reforms that would really push the private sector, deconstrain the private sector, open more space for the private sector and sequentially I guess move the state from a doer to an enabler”.
The state still controls a large part of Egypt’s economy, including three of its largest banks along with much of its oil industry and real estate sector. To address this, the Egyptian government is planning its first share offers in state-owned companies for more than a decade, though an initial five out of 23 sales have been postponed to 2019 because of market conditions.