World Bank raises Egypt financing to $1 bln amid regional turmoil

Guimbert made the remarks in response to an Ahram Online question on the extent to which the new tranche of the World Bank’s support, released on Friday, is expected to help Egypt navigate the spillovers of the ongoing regional tensions in the Middle East.

The World Bank Group approved a new $1 billion financing package for Egypt on Friday to support private-sector job creation, strengthen macroeconomic stability, and accelerate the country’s transition towards a greener economy.

Speaking during a roundtable held on Saturday at the World Bank’s headquarters in Cairo, Guimbert told Ahram Online that Egypt faces the dual challenge of managing short-term external shocks while remaining committed to medium-term reforms aimed at restoring macroeconomic stability and expanding private-sector-led growth.

“The whole logic of these operations is to navigate the short-term impact of crises without losing sight of the medium-term reform agenda,” Guimbert said.

He noted that Egypt had already begun recovering from the 2023 economic shock through a package of reforms that included exchange rate liberalisation, fiscal tightening, and measures to improve the business environment before renewed geopolitical tensions added fresh pressure.

According to Guimbert, the World Bank expanded the financing package in response to growing uncertainty linked to regional developments and global market volatility.

He added that part of the programme is designed to shield vulnerable groups through stronger social protection measures, including expanding the reach of the Takaful and Karama cash-transfer programme and extending universal health insurance coverage to beneficiaries.

Guimbert described Takaful and Karama as one of the world’s more efficient and resilient cash-transfer systems, noting that many countries are moving towards more targeted and shock-responsive welfare models.

However, he stressed that subsidies and cash transfers should complement rather than replace one another, adding that the World Bank is working with the Egyptian authorities to improve coordination between the two systems to avoid overlaps and coverage gaps.

In response to another Ahram Online question on how the World Bank supports Egypt’s efforts to expand the private sector’s role in the national economy while dealing with the implications of the regional escalation, Guimbert said private investment in Egypt has risen from roughly four percent of GDP to around six percent over the past two years—a nearly 50 percent increase—though still far below the approximately 20 percent seen in comparable emerging economies.

He said the World Bank-backed programme focuses on three core reform pillars.

The first aims to create a more level playing field between the public and private sectors through reforms to state-owned enterprises (SOEs), stronger competition policies, and equal tax and regulatory treatment.

The second pillar targets fiscal reforms to reduce pressure on domestic credit markets, according to Guimbert.

He said heavy government borrowing has constrained financing available to private businesses, adding that increasing domestic revenues, rationalising spending, and improving debt management would help free up credit for private investment.

The third pillar, according to Guimbert, centres on Egypt’s green transition, particularly renewable energy and the efficient use of water and electricity.

He said Egypt has strong untapped potential in green industries, both for domestic growth and export expansion.

Guimbert also described reforming the state’s role in the economy as a long-term process that may take years before its full impact becomes visible.

Still, he pointed to what he described as “positive institutional developments,” including Egypt’s State Ownership Policy Document, the establishment of governance structures overseeing state assets, and greater transparency regarding taxes paid by state-owned companies.

He also highlighted the role of the International Finance Corporation (IFC) in advising the Egyptian government on its privatisation and asset monetisation programme, including airport-related transactions.

Despite current pressures, Guimbert said Egypt retains significant untapped growth potential, particularly in sectors capable of generating large-scale employment.

He noted that Egypt currently creates around half a million jobs annually, while the labour market likely requires two to three times that number to absorb new entrants.

According to Guimbert, the World Bank sees strong opportunities across five key sectors: tourism, agriculture and agribusiness, healthcare, infrastructure and renewable energy, and manufacturing.

“These sectors have strong potential not only to support growth, but also to create jobs and strengthen exports,” he said.