Egypt: World Bank’s New Country Assistance Strategy To Support Egypt’s Reform Agenda

CAIRO, June 16, 2005 — The World Bank’s Board of Directors discussed today a new Country Assistance Strategy (CAS) for Egypt covering the next four years from fiscal years 2006 to 2009.  The strategy supports the Government of Egypt’s goal to fight poverty by focusing on areas where the Bank’s contribution will achieve results, such as improving the investment climate and enhancing economic, social and financial reforms.

The Government of Egypt spelled out a long term vision of development which includes the twin goals of achieving high and sustainable growth and the alleviation of poverty and income disparity.  Its five-year national development plan seeks to achieve growth by making more use of the private sector as a catalyst for development, as well as changing the role of the government in managing the economy.

In response to these national goals, the current CAS is aimed at supporting three key development objectives — facilitating private sector development, enhancing the provision of public services, and promoting equity.  To achieve these objectives, the strategy proposes a "results-based” financial assistance program in the range of about $2-2.8 billion dollars in support of enhancements in infrastructure, education, poverty alleviation, financial sector reforms.  The lending package is combined with the Bank’s non-lending technical assistance, analytical and advisory services bringing worldwide experience on a variety of areas underpinning the reform program including poverty alleviation.

With a population of more than 70 million, Egypt is currently undergoing a demographic transition which offers both challenges and opportunities.  Unemployment is a major challenge and high priority on the national policy agenda.  At almost 11 percent and affecting more women than men, there is an immediate need to create sufficient jobs for university graduates, accommodate an increasing labor force and bridging the skill gap across economic sectors.  For lower income families, the demographic transition poses challenges that require resetting of social safety nets to ensure access to the most vulnerable.

The CAS seeks to boost the role of the private sector in promoting growth by improving the business climate in the areas of trade, finance, and taxation, among others.  The role of the public sector will also be strengthened by enhancing the provision of public services such as infrastructure, education and macro-economic stability.  This two-pronged growth strategy is aimed at helping Egypt meet the challenge of reducing unemployment against the backdrop of a growing labor force. 

"Since July 2004, some bold reform measures have already been initiated and implemented and we are optimistic that planned reforms, second and third generation reforms, will set Egypt firmly on the path to sustainably achieve its   development goals,”  says Emmanuel Mbi, the World Bank’s Director of the Egypt, Yemen and Djibouti Country Department .  “The interest and commitment to reform expressed across all sectors and society at large offers a remarkable opportunity for the World Bank and other development partners to harness their financial and technical support for Egypt's economic growth and social development."

The preparation of Egypt’s CAS involved extensive consultations with a wide range of stakeholders who were given an opportunity to voice their views on the country’s development priorities.  Policy makers, opinion leaders, the private sector, entrepreneurs, local communities and non-governmental organizations contributed to defining strategic priorities and interventions aimed at supporting Egypt's reform agenda.   Members of the Egyptian government were also active partners in contributing to the design of the CAS and facilitating the consultation process. 

"A key feature of this CAS is the high degree of country ownership. The process of repeated consultations with key stakeholders at the central and local levels in Egypt, including the Government, the private sector, and civil society clearly underlies this ownership,” says Farrukh Iqbal, World Bank Lead Economist for Middle East and North Africa, who led CAS preparations.  “The availability of a coherent and focused national development strategy on which to build the CAS has facilitated ownership while ensuring relevance.”