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Document of The World Bank Group
FOR OFFICIAL USE ONLY
Report No. 43476-EG
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
COUNTRY ASSISTANCE STRATEGY PROGRESS REPORT
FOR
THE ARAB REPUBLIC OF EGYPT
FOR THE PERIOD FY06-08
June 9, 2008
Egypt Country Management Unit Middle East and North Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be disclosed without World Bank authorization.
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The date of the last Country Assistance for Egypt (report no. 32190 EG) was May 20, 2005 CURRENCY AND EQUIVALENTS Currency Unit = Egyptian Pound (LE)
(Exchange Rate as of April 29, 2008: 1US$ = 5.38 LE ) Fiscal Year: July 1 - June 30
ABBREVIATIONS AND ACRONYMS
AAA Analytical and Advisory Activity AfDB African Development Bank CAS Country Assistance Strategy DOTS Development Outcome Tracking System DPL Development Policy Loan DPR Development Policy Review EC European Commission EITI Extractive Industries Transparency Initiative EMRC Egyptian Mortgage Refinancing Company ESW Economic and Sector Work EU European Union FDI Foreign Direct Investment FIAS Foreign Investment Advisory Service FSAP Financial Sector Assessment Program FY Fiscal Year GAFI General Authority for Investment GDP Gross Domestic Product GSM Global System for Mobile Communications IBRD International Bank for Reconstruction and Development ICT Information and Communication Technology IFC International Finance Corporation IMF International Monetary Fund LIBOR London Interbank Offered Rate LPG Liquefied Petroleum Gas MENA Middle East and North Africa MIC Middle Income Country MIGA Multilateral Investment Guarantee Agency MW Megawatt OECD Organization for Economic Cooperation and Development PEP-MENA Private Enterprise Partnership for Middle East & North Africa PER Public Expenditure Review PPP Public Private Partnership RAMP Reserve Asset Management Program RTA Fee based (previously called reimbursable) Technical Assistance SME Small/Medium Enterprise TA Technical Assistance TAC Transparency and Anti-corruption Commission TDO Total Debt Outstanding and Disbursed UN United Nations UNDP United Nations Development Program USAID US Agency for International Development WBI World Bank Institute
FOR OFFICIAL USE ONLY
MANAGERS AND STAFF RESPONSIBLE FOR THIS CAS PROGRESS REPORT
Vice Presidents: Daniela Gressani (IBRD) Farida Khambata (IFC) Yukiko Omura (MIGA) Directors: Emmanuel Mbi (IBRD) Michael Essex (IFC) James Bond (MIGA) Task Manager: Xavier Devictor (IBRD) Core Team Members: Alexander Kremer, Alwaleed Alatabani, Ayat Soliman, Ernesto Cuadra, Fabrice
Houdart, Hoveida Nobakht, Irene Sitienei, John Langenbrunner, Lorraine James, Nada Shousha, Radwan Shaban, Rapti Goonesekere, Sahar Nasr, Xavier Devictor.
AKNOWLEDGMENTS
The preparation of this CAS Progress Report has been a team effort which involved the extended Egypt country team, including IBRD, IFC, and MIGA. Government officials gave generously of their time and ideas at various stages and the final product has benefited greatly from their inputs. Although it is difficult to name all contributors, the final document reflects their inputs for which the core team is most grateful. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be disclosed without World Bank authorization.
TABLE OF CONTENTS
I. INTRODUCTION........................................................................................................ 1
II. COUNTRY CONTEXT ............................................................................................. 1
III. MID-TERM STOCKTAKING OF WORLD BANK GROUP ACTIVITIES .... 4
World Bank Group Engagement................................................................................ 4 Progress Towards CAS Objectives............................................................................ 5 Instruments................................................................................................................. 8
IV. THE BANK GROUP STRATEGY GOING FORWARD................................... 12
Overall Approach..................................................................................................... 12 Planned Program of World Bank Group Activities ................................................. 13 Managing the Risks ................................................................................................. 15
V. CONCLUSION.......................................................................................................... 16
Annex 1: CAS Results Matrix ........................................................................................17 Annex 2: Planned IBRD Activities in the Period FY09-FY11……………………...…24 Annex 2B: Planned IBRD Activities in the Period FY09-FY11 by Theme………….....25 Annex A1: Egypt at a Glance………………………………………………………… ...28 Annex B2: Selected Indicators of Bank Portfolio Performance and Management…. .....30 Annex B3: IBRD/IDA Program Summary………………………………………….......31 Annex B3: IFC Investment Operations Program……………………………………......32 Annex B4: Summary of Non Lending Services……………………………………… ...33 Annex B6: Key Economic Indicators………………………………………………... ....35 Annex B7: Key Exposure Indicators………………………………………………… ....37 Annex B8: Operations Portfolio (IBRD/IDA and Grants)…………………………... ....38 Annex B8: Statement of IFC’s Held and Disbursement Portfolio……………………....39
ARAB REPUBLIC OF EGYPT COUNTRY ASSISTANCE STRATEGY PROGRESS REPORT
I. INTRODUCTION
1. The Country Assistance Strategy (CAS) Progress Report takes stock of the implementation of the Egypt CAS and discusses the World Bank Group’s plans for the period ahead. The Board of Executive Directors discussed the FY06-FY09 Country Assistance Strategy (CAS) for Egypt on June 15, 2005 (Report Nr. 32190-EG). The Progress Report takes stock of the implementation of the CAS, sets out some adjustments to reflect the evolving situation on the ground (including Egypt’s much stronger economic performance), and recommends that the CAS period covers an additional two fiscal years under a largely unchanged strategic framework that, nonetheless, has been refined to help address emerging issues. 2. Egypt is a middle income country (MIC) with strong ownership of its development strategy. Over the last years, the Government has established a solid track record as one of the champions of economic reforms in the Middle East and North Africa region (MENA). The program presented below is the result of intensive consultations within the context of the strategic partnership with the Egyptian authorities. It reflects the priorities expressed by the Government with regard to the scope and focus of engagement by the World Bank Group as well as the substance of discussions with key stakeholders. 3. This report consists of three parts – a brief presentation of the country context and recent developments, a stocktaking of the World Bank Group’s program at mid-course of CAS implementation, and a description of the World Bank Group’s strategic approach for the period ahead. The results matrix is in Annex 1, a list of planned IBRD activities in Annex 2, and standard CAS annexes in Annexes A1 to B8.
II. COUNTRY CONTEXT
4. Since the discussion of the CAS, the Government has continued to implement an ambitious reform agenda, including trade liberalization, a complete overhaul of the tax system as well as substantial financial sector reforms and privatization (see Box 1). This has led to a friendlier investment climate, with Egypt ranked top reformer in Doing Business 2008 (although much remains to be done), which in turn has yielded a strong private sector response. A favorable external environment and increased regional liquidity have further contributed to a strong economic performance. Real GDP growth increased from an average 3.5 percent during FY01-FY04 to 7.1 percent in FY07, with construction, the Suez Canal, communications, and tourism among the fastest growing sectors. Such growth has also translated into job creation, and a reduction in the unemployment rate from an average of 10 percent in FY03-FY05 to 9.1 percent in FY07.
Box 1: Recent Economic Reforms
1. Trade liberalization. Through three rounds of reforms (in FY05, FY06, and FY07) the Government reduced the weighted average tariff rate from 14.6 percent to 6.9 percent, removed GATT inconsistent service fees and eliminated import fees and surcharges. 2. Tax reform. The July 2005 tax law cut personal and corporate tax rates by up to a half, reduced tax evasion, and enhanced tax administration (esp. tax collection and inspection). 3. Reduction of energy subsidies. In two steps (in FY05 and FY06), energy prices were raised by 25 to 90 percent (depending on the products). The Government has announced a gradual phasing-out of energy subsidies for large industrial users over the next three years. 4. Improvement of cash and debt management. Major government accounts were consolidated into a Treasury Single Account and circular debts among the central government, the National Investment Bank and the Social Insurance Funds were settled. 5. Financial sector reform. The Government has launched a vigorous program of reforms including: (i) consolidation of the sector (from 57 to 40 banks) through enforcement of stricter prudential rules; (ii) privatization of one of the largest banks and divestiture of State-owned shares in 13 of the 17 joint-venture banks; (iii) development of a strategy to settle non-performing loans; and (iv) strengthening of banking regulation and supervision. 6. Improved business environment. Egypt was ranked “top reformer” in Doing Business 2008 as the Government reduced the minimum capital required to start a business, halved the time and cost of start-up, reduced fees for registering property, and launched one-stop shops for traders in ports (cutting the time to import and to export by seven and five days respectively). Much remains to be done, however, as the country still ranks 126th in Doing Business 2008. 7. Public assets management and privatization. Beside financial sector privatizations, the Government awarded the third GSM license to a private consortium, and privatized a number of public companies, including the largest department store chain. The Ministry of Housing has disposed of 84,000 ha of urban public land through sealed bid auctions. The government is also putting in place a strong institutional framework for Public Private Partnerships (PPPs). 8. Early steps towards social sector reforms. The Government is moving ahead with preparation of an in-depth pension reform and the establishment of a health insurance scheme – in both cases aiming for a more comprehensive and unified system. The Government is also exploring options to restructure and rationalize current subsidy policies.
5. Most macroeconomic indicators reflect these positive developments. Total investment increased from an average of 17.6 percent of GDP over FY01-FY04 to 21.2 percent in FY07. This was largely due to a surge of foreign direct investment (FDI) to 8.6 percent of GDP in FY07 (FDI in the non-oil sector increased from an average of 0.6 percent of GDP during FY01-FY04 to 6.3 percent in FY07). Investment by the Egyptian private sector also increased, albeit more slowly from 5.3 percent of GDP in FY05 to 7.0 percent in FY07, which underlines the potential for a continued strong performance as the
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business environment further improves. The overall balance of payments recorded large surpluses (4.2 percent of GDP in FY07). Net international reserves reached US$33 billion at end-March 2008, equivalent to over 8 months of imports of goods and non-factor services. The real effective exchange rate is fairly close to its long-term equilibrium level. Gross external debt has declined for several years, reaching 23.3 percent of GDP at end-FY07. Nevertheless, net domestic general Government debt has overall increased (with some fluctuations) to 50.5 percent of GDP at end-FY07. International rating agencies have improved Egypt’s rating, and the Government successfully issued its first five-year Euro-bond in July 2007 for US$1.05 billion with a yield of 8.875 percent (which was oversubscribed 2.5 times). The authorities are also working to manage inflationary pressures, with CPI averaging 10.0 percent during the first 10 months of FY08. 6. The Government has also made progress in gradually reducing the budget deficit, although much remains to be done to address what is a major and perennial issue in Egypt. The overall general Government deficit stands at 7.7 percent of GDP in FY07, down from 9.2 percent of GDP in FY06. The Government plans to further reduce the deficit by an average of one percentage point per year until 2011: this is expected to be challenging given the soaring international food prices and the mounting public pressures that have led to an increase of wages and food subsidies. Priorities for the coming period include: (i) further reducing energy subsidies (5.5 percent of GDP in FY07); (ii) expanding the value-added tax and improving the property tax; and (iii) generating savings through improved financial management practices. 7. Looking ahead, real GDP growth is expected to remain high, assuming an adequate external environment and deepened and broadened economic reforms that would facilitate a further increase of investment. Bank staff project a growth rate of 6.5 percent or above through FY11 which is in line with IMF projections but lower than the Government’s target of 8 to 9 percent over the next five years. Inflationary pressures are also expected to remain high (due to high economic growth, large capital inflows, and the increase of international commodity and food prices); continued efforts to reduce the budget deficit and a vigilant monetary policy will be needed for inflation to remain in single digits until FY11. Particular attention will also be needed to help mitigate the impact of food and fuel prices increases, which has become an important social issue, without resorting to inflationary measures. The performance of the external accounts is expected to remain strong. The level of foreign debt is projected to significantly decline both in volume and as a share to GDP – and the economy is expected to remain resilient to shocks. 8. As in many other countries, however, the recent strong macroeconomic performance has not immediately translated into improved living conditions for those below and around the poverty line. Social indicators have improved dramatically over the last decade, but poverty remains high at about 20 percent of the population (and as high as 40 percent in rural Upper Egypt). Unemployment and under-employment continue to affect a relatively large share of the labor force, in large part due to a mismatch between skills and the demand on the labor market, including among the
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educated youth. There is hence a perception that the high economic growth has benefited the better off segment of the population disproportionately. While there is no data to confirm such a perception, growth has been uneven across regions and economic sectors and expectations have been rising. Hence, the environment for reform is likely to remain a difficult one, in a politically charged context, especially as the upcoming presidential elections (scheduled for 2011) get closer. 9. In this context, the Government has restated its commitment to pursuing the implementation of its national development agenda, which underpins the World Bank Group engagement strategy articulated in the CAS. Within the framework of this development agenda, the Government has decided to increase its short-term focus on social policies and social services delivery, while consolidating and deepening pro-growth reforms in a deteriorated global environment, so as to ensure that the benefits of the recent economic performance are broadly shared.
III. MID-TERM STOCKTAKING OF WORLD BANK GROUP ACTIVITIES
World Bank Group engagement
10. In Egypt, the World Bank Group operates as part of a broader international effort, together with a number of other donors and financiers (some of which offer financial support on a larger scale and at more attractive conditions than IBRD and IFC through grants, low-interest rates, and subsidized loans). Key development partners in Egypt include: USAID, the European Commission, the European Investment Bank (EIB), Japan, European Union bilaterals, the Gulf countries, and the African Development Bank. 11. Within this context, the relationship between Egypt and the World Bank Group has been transformed and markedly improved over the last few years as a result of the progress Egypt has made in implementing reforms and of the successful turnaround of the World Bank Group program. This has created a new situation, where Bank Group assistance needs to be scaled up and adjusted to best respond to the needs of a sophisticated client (see Box 2). 12. The transformation of the partnership between Egypt and the World Bank Group has been best illustrated by the Government’s decision to make a financial contribution to the IDA 15 replenishment: Egypt (which graduated from IDA in 1999) is the third former IDA country to become a contributor, after Turkey and Korea (which both graduated from IDA in 1973). Egypt has also repeatedly indicated its commitment to working with the World Bank Group in providing support to other developing countries through South-South cooperation. This demonstrates the value Egypt attaches to the support that can be provided by the World Bank Group to developing countries.
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Box 2: Why does Egypt work with the World Bank Group ? The Government values the World Bank Group’s work in Egypt for the ideas, innovations, and knowledge as well as the financing that it brings. It sees the multilateral World Bank Group as a neutral, disinterested partner that can be relied upon to act in Egypt’s best interests, and is strongly interested in learning from the Group’s international experience. World Bank Group activities build on a long-term partnership based on trust, shared commitment, and pragmatic cooperation that aim to develop and implement sustainable solutions tailored to pressing development problems. IBRD. While the Government has access to financial resources at similar or better conditions than IBRD can provide, it remains interested in working with IBRD (and borrowing from IBRD) because it values the way IBRD can deliver an integrated package of knowledge, technical assistance, and financial resources in support of specific reforms or sectoral programs – which is not readily available from other sources. In addition, IBRD typically makes an open-ended commitment to remain involved in a problem until it is satisfactorily resolved at a cost that is limited to the IBRD charges on the associated financing. IFC. To sustain long-term growth, many Egyptian enterprises need help to upgrade their corporate governance, environmental, and social practices. Egyptian private companies work with IFC because they value IFC support in these areas of additionality, and in adopting international norms and practices – support that is most effective when delivered through a conjunction of financing and technical assistance. As a partner of the Government, IFC also plays a unique role (primarily through its advisory services) in supporting initiatives that lead to further economic liberalization and business climate improvements. MIGA. Egyptian companies have used MIGA support to invest abroad. The Government is also using MIGA’s technical assistance to help promote investment. MIGA could also complement existing insurance capacity (mostly bilateral schemes supporting underlying bilateral trade relationships) to help attract FDI, although to date this role has been marginal. WBI. WBI supports and complements the rest of the Bank Group through capacity building and learning programs which are aligned with the strategic dimensions of the Bank’s engagement in Egypt and the region. Egypt values this contribution because it makes international best practices, experiences, and knowledge from other parts of the world available to Egyptian audiences, both in and outside the Government.
Progress towards CAS objectives
13. The program outlined in the CAS to support the Government’s reform agenda is articulated around three pillars: (i) facilitating private sector development (financial sector, trade, business environment); (ii) enhancing the provision of public services (macroeconomic stability, infrastructure services, environment, education, public sector performance); and (iii) promoting equity (safety nets, regional disparities, health, gender). 14. Overall, there has been substantial progress under each pillar (also see Annex 1):
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• Facilitating private sector development o Financial sector. The World Bank Group has supported the successful
implementation of the first two phases of the Government’s three-phase reform program through analytical work, technical assistance, IBRD lending, and IFC investment, in close coordination with other development partners, and with a particular focus on increasing private ownership in the banking sector, developing the mortgage market, and small and medium enterprises (SME) banking.
o Trade. The World Bank Group has focused on analytical work and technical assistance by both IBRD and IFC to strengthen value chains in selected sectors, and to develop a global trade finance program with local banks.
o Business environment. The World Bank Group has successfully informed the internal debate on priorities and provided an impetus for reform through its benchmarking and dialogue with the authorities. This has been complemented by targeted IFC technical assistance with a significant impact on simplification of registration processes in a pilot region (Alexandria). The World Bank Group has also helped move the Public Private Partnerships (PPPs) agenda forward, through financial and advisory services by both IBRD (including WBI) and IFC. IFC has provided management training to about 7,000 SME managers.
• Enhancing the provision of public services
o Economic management. The World Bank Group’s contribution has essentially taken the form of analytical work and monitoring to inform a solid, high-level policy dialogue.
o Infrastructure services: • Energy. The World Bank Group is successfully financing the expansion of
power generation capacity and the connection of 300,000 households to the natural gas distribution network (through ongoing IBRD loans). IBRD has also developed a solid dialogue on sector reforms, including energy pricing and subsidies issues, which is informing key Government decisions in a sensitive area.
• Telecommunications. The World Bank Group has successfully provided fee-based IBRD technical assistance which has helped improve the regulatory framework and increase competition.
• Transport. IBRD lending, analytical work, and technical assistance have been instrumental in expanding airports capacity and fostering private sector involvement in airports management, in preparing for a restructuring of the Egyptian National Railways, and in raising the profile of issues related to road maintenance, while IFC is supporting a pilot Public Private Partnership (PPP) in the road sector.
• Water (including irrigation and sanitation). The World Bank Group has developed pilot approaches to promote the role of user associations and develop PPPs, through both IBRD and IFC. Implementation of the pilots is underway.
o Environment. The World Bank Group has successfully developed a financing scheme for pollution abatement (through financial incentives to polluters). In
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parallel, the technical dialogue has progressed to the point that country systems can be partly applied to IBRD-financed projects.
o Education. The World Bank Group has focused on accompanying the Government’s reform efforts. To that effect, IBRD has developed and tested a series of pilot approaches (to strengthen the management and relevance of higher education, to facilitate the transition between general and vocational secondary education, to better link professional training to the labor market, and to expand early childhood education), and has engaged in a significant and successful policy dialogue, including on sensitive curriculum-related issues (secondary education curriculum reform is now underway).
o Public sector. Substantive analytical work has been carried out in several areas (including procurement, transparency, etc.), and has been complemented by fee-based advisory services. The Government has recently expressed its interest in stepping up the World Bank Group’s activities in this area.
• Promoting equity
o Social protection and safety nets. The World Bank Group has provided substantial IBRD technical assistance (in part fee-based) in two areas: to help prepare the upcoming pensions reform (through legal and actuarial work); and to prepare for the reform of existing subsidies (including by facilitating an exchange of experience with other countries). This work has been well appreciated by the authorities and is making a significant contribution to policy making.
o Inter-regional disparities. The World Bank Group is focusing on strengthening the analytical base for policy and investment decisions affecting Upper Egypt – through IBRD analytical work and technical assistance (with uncertain prospects for potential IBRD lending). The Government is committed to step up investments in this part of the country.
o Health. The World Bank Group has focused its support on a two-fold agenda. IBRD is supporting policy reforms (health insurance reform through both pilot lending and technical assistance, technical review of the Government’s strategy in the sector), and is deeply involved in the actual design of upcoming reforms. IFC has financed three private sector-managed health facilities, two of which are now fully operational.
o Gender. The World Bank Group has provided support to strengthen advocacy groups, while at the same time preparing substantive analytical work. This has helped inform the policy debate, especially on economic opportunities for women.
15. Such progress has been underpinned in large part by the close cooperation and synergies developed within the World Bank Group (see Box 3). One of the strength of the World Bank Group’s program in Egypt has been to conceive, design and implement them as complementary part of an overall effort. 16. Progress is also reflecting the Bank Group’s efforts to be responsive and adaptable to the Government’s needs and requests. Such flexibility has however also translated into a significant cost of dropped activities. While this cost remains in line with
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experience in comparable countries, both the Bank Group and the Government are determined to take steps to reduce it during the coming period.
Box 3: Illustrative examples of World Bank Group synergies Over the last years, particular attention has been paid to maximizing synergies between IBRD and IFC at both program and project levels. Examples of such synergies include: • Mortgage market development: IBRD promoted the creation of a mortgage liquidity company
(the Egyptian Mortgage Refinance Company, EMRC) and provided a long term loan to EMRC. IFC prepared a feasibility report on EMRC, invested equity in the company and is currently providing capacity building advisory services to help start up its activities.
• Education and skills development: IBRD financed a demand-driven training program, while
IFC is strengthening Egyptian investors associations and SMEs to help them both articulate their needs and offer training services.
Instruments
17. IBRD is providing its support through an integrated package of knowledge, advisory services, technical assistance, and financing, in support of Government priorities in given sectors. Over the last years, several models have emerged as to the ways lending and knowledge can best be combined to support reforms in a country like Egypt (see Box 4). Benchmarking exercises have also proven effective to inform and stimulate policy debates and influence reforms. The facilitation of South-South exchanges of experience among practitioners (typically through technical assistance tasks) is also extremely effective in helping the Government define the “how to” of implementation for key reforms. Particular efforts have been made to deliver knowledge services in the social sectors where the Government is reluctant to borrow. 18. Since the discussion of the CAS in mid-2005, IBRD has approved 10 new projects, for a total commitment of US$1.797 billion. Although these new operations cover a number of sectors, they were particularly concentrated in the financial sector, and infrastructure (energy, water, transport), and to a lesser extent in education and environment. Overall, the preparation of new operations has gone well (with the exception of the Alexandria Development Project for which the Government requested cancellation shortly after Board approval, as it no longer fitted in the Government’s priorities for borrowing in an evolving situation). 19. The current IBRD portfolio includes 15 projects with a total commitment of US$1.32 billion (the total cost of these projects, including Government counterpart funding and co-financing by other development partners, is about US$2 billion), of which US$825 million is undisbursed. Portfolio performance which was particularly weak during the late 1990s and early 2000s has been turned around over the last three years, thanks to the combined efforts of the Government and IBRD: (i) the number of projects at risk has decreased (from 28 percent in 2002 to 13 percent in 2007); (ii) the pace of implementation has dramatically improved (with a disbursement ratio up from 6 percent in 2002 to 26 percent in 2007); (iii) the vexing issue of effectiveness delays has been
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largely addressed (from 19 months in 2002 to 7 months in 2007); and (iv) both fiduciary and safeguards management are generally sound. Most importantly, the percentage of projects with a satisfactory impact (as assessed by IEG) has increased from 18 percent for projects closed in the late 1990s to 73 percent for projects closed since 2002.
Box 4: How projects support reforms in Egypt: four “models” Underpinning sectoral dialogue through “brick-and-mortar” operations – for example in the transport and energy sectors. IBRD is financing straightforward investments with a high economic rate of return, but a minimal “reform content”. Yet these operations have proven successful at building a solid, trust-based sectoral dialogue. As a result, because of the credibility acquired through the loans, the Government has made parallel requests for IBRD analytical and advisory services to support the design and implementation of reforms. Overall, the success of this model depends on the quality of the IBRD teams, on the strength of the Egyptian counterparts, and on maintaining the necessary budgetary flexibility on the IBRD side to be able to rapidly respond to emerging requests. Piloting innovative schemes – for example in the water, environment, and education sectors. IBRD projects help adapt technical approaches that have worked in other countries to the Egyptian context. Such operations need to be designed in a way that makes it possible to draw and disseminate lessons. Implementation also typically starts slowly, as it represents a departure from established practices in the sector. Overall, the success of this model depends on identifying the “right” pilot that brings innovation and yet can be absorbed in the Egyptian context, and on ensuring that there are both financial resources and political willingness to scale up the operation. Supporting reforms through DPLs – for example in the financial sector. IBRD provided a broad range of services over several years, through a combination of analytical work, technical assistance, and financial support through DPLs. This approach has worked well because the package of activities was conceived as a way to support the Government in implementing its reform program for which it had strong ownership, rather than as a means to impose conditionalities. The success of such a model requires both strong IBRD teams and strong ownership and leadership by the Government. Supporting reforms through sectoral investment projects – for example in the health sector. IBRD operations aim to finance the mix of technical assistance, capacity building, and other start-up costs for the implementation of a sectoral reform. The success of such a model requires the ability to use a relatively rigid instrument in an evolving environment: to closely monitor developments on the ground, to make adjustments during implementation, and to strike a sound balance between the necessary focus on “soft” aspects of implementation and traditional disbursement indicators.
20. Overall, Egypt’s current portfolio performance compares well with other large IBRD clients (including China, Turkey, Brazil, and Mexico). Key challenges for the coming period include: (i) maintaining current performance; (ii) reducing start-up delays, which are significant for the most innovative operations (in part due to the very innovativeness of these operations); (iii) reducing non-financial costs of doing business (especially with regard to procurement systems); and (iv) getting the most out of successful projects (in terms of scaling up and learning experiences).
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21. Since the discussion of the CAS, IBRD has also carried out significant analytical work, through formal Economic and Sector Work, Trust Fund-financed studies, and policy notes. A significant part of this work was carried out in conjunction with IFC. Overall, its impact has been solid (see Box 5).
Box 5: Selected examples of high-impact World Bank Group analytical work Investment climate and financial sector. IBRD and IFC advisory services were instrumental in designing the reforms that resulted in Egypt being ranked “top performer” under Doing business 2008. IBRD and IFC support to the development of a framework for PPP (and for building the corresponding capacity to manage this line of activity) is starting to yield results. Public Expenditure Review. This multi-year, programmatic work resulted in the production of a series of short and practical sectoral policy notes which have helped inform the debate in some key sectors (e.g., education, health, infrastructure). Poverty analysis. The poverty work (including poverty assessment and work on subsidies) has helped inform and shape the public debate and discussions among stakeholders. Pensions. The analysis of the pensions system was highly regarded by the Government and is being translated into an actual reform. Infrastructure. A substantial amount of analytical work was carried out in the infrastructure and environment sectors, often consisting in “hands-on” advice, at both strategic and technical levels: to underpin the national railways transformation plan, to prepare decisions on the disposal of public land and the broadening of social housing subsidies, to review the pricing of natural gas, or to assess the cost of environmental degradation.
22. Significant technical assistance has also been provided in a number of sectors, including financial sector, trade, private sector development, energy (including in support of pricing reform), public private partnerships, health, gender, and social protection (including subsidy reform). A small but increasing part of IBRD’s technical assistance is provided against a fee. Fee-based technical assistance has been used in areas such as information technology (to help modernize the regulatory framework), governance (in the corporate sector and as regards freedom of information), and pension reform (to review legal documents and carry out actuarial studies). 23. This work has been complemented through the increased involvement and active contribution of the World Bank Institute (WBI), especially: (i) to raise awareness among stakeholders on corporate social responsibility and to build the corresponding “how-to” skills for the private sector; (ii) to strengthen Egypt’s capacity to enhance access to finance; (iii) to support dialogue on key policy options in several thematic areas (including education reform, health, governance, labor market, and access to finance); and (iv) to strengthen the regulatory capacity needed to implement the national water supply and sanitation strategy. WBI has also made particular efforts to build organizational partnerships with local knowledge and learning institutions.
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24. Finally, IBRD has provided support to the Egyptian authorities in managing their assets and growing international reserves. Egypt has been a solid client of the Reserve Asset Management Program (RAMP) managed by IBRD Treasury. 25. IFC commitments have increased dramatically from an average of around US$50 million per year during the period FY03-FY05 to US$310 million in FY07. IFC’s total committed portfolio as of end-March 2008 was US$466 million for 33 projects for its own account. The portfolio is diversified and includes investments in the financial sector, infrastructure, oil and gas, metals, agribusiness, mining, ICT, and health care. A significant part of these investments are helping develop synergies with the IBRD program. With an annual pipeline of around US$200-250 million expected in the next two fiscal years, IFC’s total investments in Egypt during the proposed extended CAS period could amount to close to US$1 billion. This makes Egypt one of the two largest exposure countries for IFC in the MENA region (together with Pakistan, which is part of IFC MENA Region). 26. IFC advisory activities have also been scaled-up, through IFC’s Private Enterprise Partnership facility (PEP-MENA). The focus is on strengthening financial markets, simplifying business start-up procedures, SMEs, corporate governance and providing transaction advice for public-private partnerships (PPPs) in health, education and infrastructure. Illustrative activities include the following: • Since early 2006, IFC is providing advisory assistance on simplifying business start-
up procedures in Alexandria with multiple government authorities including the General Authority for Investments and Free Zones (GAFI). This work builds on a FIAS Administrative Barriers study as well as an IBRD Investment Climate Assessment). Implementation of a first set of recommendations resulted in a 40 percent reduction of time needed for registration; a 30 percent reduction of the number of corresponding procedures; and a 26 percent reduction in cost. A national roll-out of the project has now started, aiming to further simplify these procedures throughout the country.
• IFC is also encouraged by the Egyptian Government’s increased focus on Public-
Private Partnerships (PPPs). The collaboration with IFC, which is formalized through a framework agreement, has become a model for similar programmatic approach to PPPs in other countries in the region – and the complementarity of technical assistance provided by IBRD and IFC in this area has proven very effective. A successful implementation of this program is expected to provide a pool of bankable projects for the private sector.
27. IFC has recently started to track the development impact of its investments in client countries by reviewing the ratings provided in supervision reports through a Development Outcome Tracking System (DOTS). Although no data is available as yet for projects implemented during the current CAS period, an analysis of projects approved in Egypt during the period 1999-2004 indicates that overall development results (particularly environmental and social impact) outperform regional and IFC averages.
11
28. MIGA’s most important contribution to date has been to support and enable investments by an Egyptian telecom company (Orascom Telecom) in two telecom projects in Pakistan and Bangladesh, with a combined gross exposure of US$152 million – an example of South-South investment. Requests for MIGA’s guarantees with Egypt as a host country are relatively limited for now, since many bilateral agencies provide comparable services. MIGA supported one project, sponsored by a Spanish investor, in the waste management sector, which was eventually cancelled by the investor. 29. MIGA has also been providing technical assistance to GAFI to further attract FDI, in coordination with advice provided by FIAS in the area of investment policy.
IV. THE BANK GROUP STRATEGY GOING FORWARD
Overall approach
30. World Bank Group activities in Egypt will be undertaken within the broader context of ongoing institutional efforts to provide better services to MICs and in the Arab world: • The proposed approach for the period ahead reflects discussions on ways to
enhance Bank Group services to MICs, in particular by (i) expanding the range of financial services and products, to the full extent possible (including local currency lending, subnational lending without sovereign guarantee); (ii) increasing the use of country systems where possible; (iii) providing timely, cutting-edge knowledge on key issues; (iv) gradually engaging on global issues, such as the impact of climate change; (v) seeking further cooperation with other development agencies; and (vi) further leveraging World Bank Group synergies.
• It also illustrates the ways the Bank Group can provide better services to the Arab
World, in particular by: (i) transferring knowledge and global experience in key areas; and (ii) providing an integrated package of financing, analytical work, technical assistance, and private sector support in selected sectors. In many ways, the Bank Group’s program in Egypt over the last period is an example of scaling up – and many of the priorities in this country reflect those identified in the broader Arab World Initiative (e.g., supporting economic reform and integration with the global economy, including transport and infrastructure; helping to enhance education quality to improve skills in the labor force; supporting social integration through work in areas such as gender, health, and social safety nets; and supporting reforms in the management of water resources).
31. Overall, the World Bank Group strategic focus proposed in the CAS remains relevant. IBRD, IFC, and MIGA will continue to provide strong and coordinated support to the implementation of Government reforms and private sector-led growth along the original three-pillar agenda. No major strategic shift is necessary or expected with regard to the focus of World Bank Group engagement. Support will include a package of
12
financing and advisory services, as may be requested by the Government, the private sector, and other relevant partners. 32. The proposed program of World Bank Group activities for the coming years has been adjusted, to respond to changes in the overall environment, help address emerging issues, and reflect progress already made. Yet, these adjustments bear only on the instruments of engagement, not on the strategic focus of this engagement. Flexibility in the choice of instruments will continue to be key to achieving results in a country like Egypt, and to respond to evolving demands for analytical and financial services from a sophisticated MIC. The program presented in Annex 2 is hence illustrative rather than prescriptive, and may be further adjusted to take advantage of new opportunities or mitigate new risks, with a view to maximizing impact on the CAS outcomes. 33. The results matrix has also been modified in order to strengthen the monitoring and evaluation of World Bank Group activities. The modifications are not caused by a strategic shift, but they are expected to allow for a better assessment of progress by: (i) providing outcome indicators that are more measurable; (ii) better distinguishing between progress that can be attributed to the government and the World Bank Group contribution; a (iii) grouping together under a single heading all indicators related to social insurance and social protection systems and; (iv) re-centering monitoring and evaluation around a smaller but more focused set of indicators. 34. This Progress Report also recommends that the CAS period covers an additional two fiscal years, until end-FY11. The CAS was initially designed to cover the period FY06-FY09. Experience shows that it is important to synchronize the CAS cycle with the Government’s own timetable for strategy-making, especially in MICs. In this context, while preparation of the new CAS may start before the 2011 elections, it would be useful to delay its finalization and presentation to the Board until a new Government is in place and has set a strategic course for the country. This timetable could however be advanced if necessary or relevant in view of developments on the ground.
Planned program of World Bank Group activities
35. IBRD is expected to remain engaged at a high level through both financing and advisory services, with a continued focus on the provision of knowledge services (embedded in loans and/or provided through analytical work and technical assistance). This effort is expected to be deployed across all priorities identified in the CAS, with a particular focus on some of the emerging Government priorities: (i) maintain a solid macroeconomic position in a complex global environment (which is part of the first pillar of the CAS); (ii) further implement reforms in the financial sector, including to broaden access to finance (first pillar); (iii) further improve the environment for private sector activity (first pillar); (iv) remove infrastructure bottlenecks to economic growth (second pillar); (v) gradually prepare the country for the challenges associated with climate change (second pillar); (vi) reduce the mismatch between skills and labor market demand (second pillar); (vii) transform the social protection system from a subsidies-based approach to a targeted cash transfer mechanism, in particular to help cope with the social
13
consequences of food and energy prices increase (third pillar); and (ix) gradually expand and consolidate health insurance (third pillar). 36. With regard to IBRD borrowing, Egypt is currently in the high-case scenario as per the triggers discussed at the time of the CAS, which were predicated on implementation of key reforms in the financial sector. The high-case lending scenario corresponded to an average commitment of up to US$700 million per annum, depending on the Government’s needs and requests.1 The indicative IBRD lending program presented in Annex 2 is larger so as to allow for flexibility during CAS implementation, in line with MIC practices and may not be fully realized (as was the case with some of the earlier projections under the CAS): yet it is likely to represent a significant increase in commitments over the last period (about doubling average annual commitments achieved since the beginning of the CAS period). Within the Annex 2 list, the selection of operations that will be presented to the Board will be made on the basis of: (i) an assessment of the applicable lending scenario at the time of lending, using the broad criteria outlined in the CAS (the high case is predicated on continued and effective implementation of the Government’s financial sector reform; the base case on slower financial sector reforms but continued sound macroeconomic management; and the low case on a substantial deterioration of both structural and macroeconomic performance)2; (ii) priorities expressed by the Government (in order to ensure that IBRD support is best adjusted to evolving Government priorities, it has been agreed that each specific activity will proceed only after the authorities formally confirm their demand for this activity); and (iii) financial exposure considerations (which may allow for a higher lending volume at some point in the future). 37. In the coming period, Egypt is expected to remain a demanding client that is looking for the best possible financial and non-financial terms for its investment program. The recent loan pricing reform has improved IBRD position, but the Government is also looking for a strong package of accompanying knowledge services, innovative financial instruments (including local currency financing), and a reduction of the non-financial costs of doing business (especially through an expanded use of country systems as may be appropriate).3 38. IFC’s total investments in Egypt during the entire CAS period could be significant – with an annual pipeline of around US$200-250 million expected in FY08 and FY09. Looking forward, IFC will continue to focus on: (i) financial sector development; (ii) private investments in infrastructure, petrochemicals, mining and oil and gas, health and education, manufacturing, and agribusiness; (iii) privatization support; (iv) advisory services for Public-Private Partnerships (PPP); and (v) assistance for SME development
1 This would correspond to a total amount of US$4.2 billion for the entire extended CAS period (of six years), including about US$1.8 billion in loans already approved since the beginning of the CAS period, and hence an average commitment of up to US$800 million for each of the three remaining fiscal years. 2 The CAS foresaw an average annual commitment of US$700 million in the high case, US$500 million in the base case, and US$250 million in the low case. 3 Progress towards output-based disbursements would require further improvements of the fiduciary environment, especially with regard to procurement and financial reporting.
14
and improving the business enabling environment through PEP-MENA facility. IFC’s pipeline for Egypt is strong and diversified, covering a broad range of sectors. 39. MIGA is seeking to expand its role in support of Egypt’s private sector activities, as part of the World Bank Group’s strategy, and in coordination with IBRD and IFC. In particular, MIGA is prepared to support foreign investment: (i) in key infrastructure sectors where the Government seeks further private participation; (ii)in the financial sector within the context of the ongoing reform program; as well as (iii) in the agribusiness, manufacturing and services sectors to promote the development of SMEs. MIGA also recognizes the growing importance of Egyptian companies in the region and will continue to support Egyptian investors who are investing abroad. 40. In addition, WBI is planning to further expand its activities in Egypt, especially in the areas of non-bank financial services and corporate social responsibility. In the financial sector, WBI will continue to focus on further strengthening regulatory capacity, in particular by linking up with DEC and providing access to research findings and cross-country experiences (as may be relevant to Egypt’s specific circumstances and needs). WBI is also supporting other IBRD efforts to establish a single regulator for non-bank financial institutions. In the area of corporate social responsibility, WBI services are expected to be provided within the context of a regional approach, and through multi-stakeholder partnerships to further impact and results. WBI will also seek to foster the development of its partnership with the Institute of Directors in support of the corporate social responsibility and corporate governance agenda, in order to scale up joint deliveries in this area. 41. Egypt is also likely to remain an important client for advisory activities undertaken by IBRD Treasury. The Government of Egypt has asked for IBRD’s assistance in public debt management and debt market development – including possibly to support the development of a comprehensive strategy for debt management, and to help improve and develop its primary and secondary domestic debt market. This may eventually be complemented by work related to the Global Emerging Markets Local Currency Bond Fund (Gemloc), a new initiative by the World Bank Group to facilitate financial sector development and enhance financial stability through market-based incentives.
Managing the risks
42. The risks and proposed mitigation strategies identified in the CAS remain largely valid. The risks resulting from a global economic slowdown are substantial: in view of the historical correlation between OECD growth rates and Egypt’s economic performance, the effect of a downturn in the US and EU would probably be significant, although the broad base of recent economic growth and the increase in liquidities available in the region could help partly mitigate this shock. Recent experience with the increase of global food and energy prices suggest that Egypt could resist external shocks but only if they are limited in scope and duration. Particular efforts will be needed to ensure that inflationary pressures remain contained, including through a tight monetary policy and a further reduction of the fiscal deficit. The risks pertaining to regional
15
16
instability remain relevant, especially if concerns about security were to affect tourism and foreign investment flows. The risks associated with social tensions and discontent with the reforms are very real, but the Government is embarking on renewed efforts to improve social policy which should help mitigate them. And the risks stemming from possible deficiencies in the institutional capacity needed to manage reforms have proven manageable to date. Overall, while there remain substantial risks, these risks pale in comparison with those associated with backtracking and the slowing down of reforms. 43. As Egypt moves closer to the presidential elections period, two additional risks are likely to gain prominence. First, the risk that reforms are slowed down during the pre-elections period. Second, the risk that the mere continuation of reforms is challenged as a result of the electoral process. While there are intense speculations among political observers, there is no consensus view as to the severity of these two risks, and at this stage the Government has repeatedly restated its commitment to move ahead with the implementation of its strategic program. The World Bank Group will closely monitor developments and adjust its activities accordingly. 44. Overall, the continued implementation of the multi-faced program supported under the CAS is expected to help mitigate some of the key risks Egypt is facing. The Bank Group can play a useful role by providing strategic and high-impact support, but the overall success rests on the Government’s leadership and commitment to reforms, which has been well demonstrated over the last years.
V. CONCLUSION
45. The Government has made great strides in implementing its reform program and continues to be committed to an agenda of private sector-led and equitable growth. In this context, the main challenges identified in the CAS and the broad strategy to help the authorities address them remain valid. In the period ahead, the Government has indicated its intent to pursue pro-growth reforms while ensuring that the benefits of such economic growth can be broadly shared. The Bank Group is committed to help in this effort through the provision of an integrated package of analytical, advisory, and financial services and further enhanced synergies between IBRD, IFC, and MIGA.
Annex: 1 CAS Results Framework (FY06-11)
World Bank Group's Mode of Outcomes influenced by the CAS Program Intervention and Main Instruments
in the Coming Period Key Government objectives and progress to date (in (LEN=new IBRD loan,
End-CAS outcomes Progress to date since the SPN=ongoing IBRD proje beginning of the CAS period
end-CAS outcomes) by end- (towards end-CAS outcomes)
Broaden access to credit, in particular for SMEs and poor
Further transform and strengthen banking supervision and adjust to a private sector-led sector
Increase of private ownership in banking sector from 3 5 percent in 2004 to 60 percent by end-CAS (increased to 52 percen2)
Increase of annual mortgage loans extended by primary lenders from LE 0.3 bn to LE 5 bn - by end-CAS
Substantial reduction in state ownership of commercial banks and divestiture of public shares in joint venture banks - by end-CAS
Adoption by the Government of a sound strategic approach to expand access to finance to the poorest - by end-CAS
-
One ofthe four major public commercial banh (Bank of Alexandria) was sold in October 2006; public shares were divested in 13 ofthe 17 joint venture bank
The number ofprimary lenders extending mortgage loans increasedfrom 2 in 2006 to 9 currently; annual mortgage loans extended by primary lenders increased to LE 1 bn
Effective implementation of ongoing financial reforms
Successful operation of the mortgage refinancing facility (which provides long- maturity loans to primary mortgage providers)
Development of a strategy to expand access to finance
Mode o f intervention: Integrated package of analytical work, technical assistance, IBRD lending, and IFCfinancial support
8 Support to financial sector reform (TA) Micro-finance (ESW) Islamic finance (ESW) Financial Sector Reform DPL I1 (SPN) Mortgage Market Development Project (SPN) and additional financing (LEN) Low-income Housing Finance Project (LEN) Access to finance (IBRD TA, LEN) Capital markets (ESW and IBRD TA) WBI - financial sector (TA) Investments in finance institutions (IFC) Mortgage refinance company (IFC TA) Credit Bureau (IFC TA) Corporate Governance (IFC TA) SME banking (IFC TA)
1.2.
Incr
ease
trad
e w
ith r
egio
nal a
nd g
loba
l par
tner
s •
Faci
litat
e tra
de, i
nclu
ding
si
mpl
ifyin
g cu
stom
s pr
oced
ures
and
bui
ldin
g in
fras
truct
ure,
etc
. (ex
tern
al
trad
e in
crea
sed
by 2
2 pe
rcen
t sin
ce 2
006;
ave
rage
nu
mbe
r of d
ays t
o cl
ear
impo
rted
goo
ds re
duce
d to
2)
• St
reng
then
link
ages
be
twee
n pr
oduc
ers a
nd
exte
rnal
mar
kets
in p
riorit
y se
ctor
s and
geo
grap
hica
l ar
eas
• Su
cces
sful
dev
elop
men
t of
sche
mes
for i
mpr
ovin
g th
e lin
kage
s bet
wee
n su
pplie
rs a
nd
exte
rnal
mar
kets
in (i
) ser
vice
s, (ii
) agr
icul
ture
in U
pper
Egy
pt
– by
end
-CA
S
• Po
licy
prop
osal
s and
pilo
t sc
hem
es a
re b
eing
dev
elop
ed fo
r ag
ricu
lture
in U
pper
Egy
pt
• Su
cces
sful
com
plet
ion
of th
e pi
lot s
chem
es a
nd e
ffec
tive
laun
ch o
f a su
bsta
ntiv
e di
alog
ue o
n th
eir s
calin
g up
/ ad
just
men
t
• In
crea
sed
trade
infr
astru
ctur
e ca
paci
ty
Mod
e of
inte
rven
tion:
Ana
lytic
al w
ork,
te
chni
cal a
ssis
tanc
e •
Trad
e in
serv
ices
(ESW
) •
Val
ue c
hain
(IB
RD
TA
)
1.3.
Incr
ease
pri
vate
bus
ines
s act
ivity
•
Incr
ease
priv
ate
inve
stm
ent
by im
prov
ing
the
busi
ness
en
viro
nmen
t (pr
ivat
e in
vest
men
t inc
reas
ed fr
om
10.7
per
cent
of G
DP
in
2006
to 1
3 pe
rcen
t cu
rren
tly, F
DIs
from
5.7
pe
rcen
t in
2006
to 9
per
cent
cu
rren
tly)
• Fu
rther
exp
and
the
role
of
priv
ate
sect
or, t
hrou
gh
priv
atiz
atio
n an
d PP
Ps
(pri
vatiz
atio
n pr
ogra
m
unde
rway
; PPP
uni
t es
tabl
ishe
d w
ithin
Min
istr
y of
Fin
ance
)
• Im
prov
emen
t in
the
Bus
ines
s En
viro
nmen
t as m
easu
red
by
Doi
ng B
usin
ess s
urve
ys –
by
end-
CA
S
• Su
cces
sful
com
plet
ion
of p
ilot
PPPs
in se
lect
ed se
ctor
s, in
clud
ing
educ
atio
n an
d irr
igat
ion
– by
end
-CA
S
• In
form
atio
n on
key
Doi
ng
Busi
ness
indi
cato
rs a
re a
vaila
ble
and
deba
ted
amon
g st
akeh
olde
rs; d
emon
stra
ted
influ
ence
of t
he b
ench
mar
king
ex
erci
se o
n re
form
s ove
r the
last
pe
riod
; Eg
ypt’s
Doi
ng B
usin
ess
rank
ing
impr
oved
from
152
in
2007
to 1
26 to
day
(Egy
pt b
est
perf
orm
er in
200
8)
• Pi
lot P
PPs w
ere
laun
ched
in
sele
cted
sect
ors (
educ
atio
n,
irri
gatio
n, h
ealth
); re
gula
tory
w
ork
on P
PP w
as in
itiat
ed30
%
redu
ctio
n in
tim
e an
d co
st to
st
art a
bus
ines
s in
Alex
andr
ia.
Nat
iona
l rol
l-out
was
initi
ated
• M
anag
emen
t tra
inin
g fo
r clo
se to
7,
000
pers
ons f
rom
1,0
00 S
MEs
• C
ontin
ued
impr
ovem
ent o
f D
oing
Bus
ines
s ran
king
•
Sele
ctio
n of
priv
ate
oper
ator
s for
edu
catio
n an
d irr
igat
ion
PPP
com
plet
ed;
actu
al la
unch
of t
heir
activ
ities
•
Stre
ngth
enin
g of
PPP
re
gula
tory
fram
ewor
k •
New
inve
stm
ent
oppo
rtuni
ties i
n m
inin
g
Mod
e of
inte
rven
tion:
Ben
chm
arki
ng,
anal
ytic
al w
ork,
and
tech
nica
l ass
ista
nce
• B
ench
mar
king
thro
ugh
Doi
ng B
usin
ess
(TA
) •
Inve
stm
ent C
limat
e U
pdat
e (E
SW)
• O
vera
ll pr
oduc
tivity
and
Sec
tora
l co
mpe
titiv
enes
s pol
icy
note
s (ES
W)
• Su
ppor
t to
PPPs
(IB
RD
and
IFC
TA
) •
Agr
icul
ture
/ Po
ultry
Indu
stry
Rec
over
y Pr
ojec
t (LE
N)
• A
gric
ultu
re a
nd IC
T (I
BR
D T
A)
• W
BI P
PP F
inan
ce P
rogr
am (T
A),
corp
orat
e so
cial
resp
onsi
bilit
y (T
A)
• In
vest
men
ts in
PPP
s (IF
C)
18
Stra
tegi
c O
bjec
tive
2. E
nhan
cing
the
prov
isio
n of
pub
lic se
rvic
es
2.1.
Con
solid
ate
mac
roec
onom
ic st
abili
ty
• R
educ
e th
e fis
cal d
efic
it by
1
perc
ent o
f GD
P ev
ery
year
(on
trac
k, u
ntil
FY08
, al
thou
gh th
e G
over
nmen
t in
dica
ted
it m
ay n
ot b
e ab
le
to re
ach
this
obj
ectiv
e in
FY
09).
• M
anag
e in
flatio
nary
pr
essu
res (
infla
tion
at 1
1 pe
rcen
t in
2007
)
• Ef
fect
ive
impl
emen
tatio
n of
the
Gov
ernm
ent’s
pla
n to
gra
dual
ly
redu
ce fi
scal
def
icit
– by
end
-C
AS
• D
ialo
gue
on m
acro
econ
omic
ta
rget
s and
pri
ority
act
iviti
es is
on
goin
g an
d co
nstr
uctiv
e
• C
ontin
ued
impl
emen
tatio
n of
the
Gov
ernm
ent’s
pla
n to
gr
adua
lly re
duce
fisc
al
defic
it
Mod
e of
inte
rven
tion:
Mon
itori
ng
• Ec
onom
ic m
onito
ring
(TA
) •
Mac
ro re
port
(ESW
) •
PER
not
es (T
A)
2.2.
Exp
and
and
mod
erni
ze in
fras
truc
ture
serv
ices
• Ex
pand
tran
spor
t, en
ergy
, w
ater
, and
te
leco
mm
unic
atio
ns
infr
astru
ctur
e, to
cat
ch u
p w
ith p
opul
atio
n gr
owth
and
in
crea
sed
econ
omic
act
ivity
–
thro
ugh
sele
cted
pub
lic
inve
stm
ents
and
PPP
s
• Im
prov
e m
anag
emen
t of
infr
astru
ctur
e sy
stem
s, es
p.
as re
gard
s fin
anci
al
sust
aina
bilit
y, p
rivat
e se
ctor
pa
rtici
patio
n, a
nd
invo
lvem
ent o
f use
rs
Ener
gy
• Ex
pans
ion
of p
ower
gen
erat
ion
capa
city
by
27,0
00 M
W –
by
end-
CA
S; in
crea
sing
shar
e of
re
new
able
s in
gene
ratio
n m
ix
• C
onve
rsio
n fr
om h
ighl
y-su
bsid
ized
LPG
to n
atur
al g
as
cons
umpt
ion
for 3
00,0
00
hous
ehol
ds –
by
end-
CA
S
• R
efor
m o
f ene
rgy
pric
ing
and
subs
idie
s, to
redu
ce th
e fis
cal
impa
ct o
f glo
bal p
rice
incr
ease
s by
end
-CA
S –
by e
nd-C
AS
• C
onst
ruct
ion
of 7
00 M
W E
l Te
bbin
is sc
hedu
led
for
com
plet
ion
in 2
010;
con
stru
ctio
n of
150
MW
Kur
eim
at S
olar
-Th
erm
al P
ower
is sc
hedu
led
for
com
plet
ion
in 2
011
• C
onst
ruct
ion
of g
as d
istr
ibut
ion
infr
astr
uctu
re fo
r 300
,000
ho
useh
olds
is so
on to
be
laun
ched
• Su
bsta
ntia
l pol
icy
advi
ce
(opt
ions
, sim
ulat
ions
, and
re
com
men
datio
ns) w
as p
rovi
ded
to th
e G
over
nmen
t on
ener
gy
pric
ing
• Ef
fect
ive
adva
ncem
ent o
f w
orks
on
pow
er p
lans
and
na
tura
l gas
con
nect
ions
• D
esig
n of
a g
radu
al y
et
subs
tant
ial e
nerg
y pr
icin
g re
form
and
laun
ch o
f its
firs
t ph
ase
Mod
e of
inte
rven
tion:
Inte
grat
ed p
acka
ge o
f an
alyt
ical
wor
k, te
chni
cal a
ssis
tanc
e, a
nd
IBRD
lend
ing
for i
nfra
stru
ctur
e
• El
Teb
bin
Pow
er P
roje
ct (S
PN)
• K
urei
mat
Sol
ar-T
herm
al P
roje
ct (S
PN)
• N
atur
al G
as C
onne
ctio
ns P
roje
ct (S
PN)
• A
in S
okhn
a Po
wer
Pro
ject
(LEN
) •
Pow
er II
I Pro
ject
(LEN
) •
Gas
Infr
astru
ctur
e Pr
ojec
t (LE
N)
• C
lean
tech
nolo
gy fo
r ene
rgy
(LEN
) •
Ener
gy p
ricin
g st
rate
gy (I
BR
D T
A)
• C
omm
erci
al fr
amew
ork
for w
ind
deve
lopm
ent (
IBR
D T
A)
• Su
ppor
t to
regi
onal
gas
pip
elin
e de
velo
pmen
t TA
(IB
RD
TA
) •
Ener
gy st
rate
gy re
port
(ESW
)
19
Tran
spor
t
• In
crea
se o
f cap
acity
of k
ey
inte
rnat
iona
l airp
orts
(to
20.5
m
illio
n pa
ssen
gers
/yea
r in
Cai
ro a
nd 6
.5 m
illio
n in
Sha
rm
El S
heik
h ) a
nd d
eleg
atio
n of
ai
rpor
ts m
anag
emen
t to
the
priv
ate
sect
or –
by
end-
CA
S
• In
crea
se o
f fin
anci
al v
iabi
lity
and
safe
ty o
f Egy
pt N
atio
nal
Rai
lway
s – b
y en
d-C
AS
• In
crea
se o
f fin
anci
ng fo
r, an
d re
gula
rity
of ro
ad m
aint
enan
ce
– by
end
-CA
S
• C
onst
ruct
ion
of a
new
term
inal
in
Sha
rm E
l She
ikh
airp
ort i
s co
mpl
eted
; con
stru
ctio
n of
a n
ew
term
inal
in C
airo
air
port
is
sche
dule
d fo
r com
plet
ion
in
2009
; air
port
s man
agem
ent w
as
dele
gate
d to
the
priv
ate
sect
or
• Th
e G
over
nmen
t ado
pted
Ban
k-re
com
men
ded
prio
ritie
s and
op
tions
for r
estr
uctu
ring
Egy
pt
Nat
iona
l Rai
lway
s
• Th
e G
over
nmen
t end
orse
d th
e Ba
nk’s
ana
lysi
s on
key
issu
es
and
prio
ritie
s for
impr
oved
road
m
aint
enan
ce; a
Pilo
t PPP
road
pr
ojec
t is u
nder
way
• Ef
fect
ive
adva
ncem
ent o
f w
orks
on
airp
orts
• C
ompl
etio
n of
neg
otia
tions
be
twee
n Eg
ypt N
atio
nal
Rai
lway
s and
rele
vant
m
inis
tries
(esp
. Min
istry
of
Hig
her E
duca
tion
and
Min
istry
of D
efen
se) o
n fa
re
disc
ount
s
• R
efor
med
regu
lato
ry
fram
ewor
k fo
r tax
is a
nd
buse
s in
Cai
ro
Mod
e of
inte
rven
tion:
IBRD
lend
ing
for
infr
astr
uctu
re u
nder
pinn
ed b
y an
alyt
ical
w
ork
• A
irpor
ts D
evel
opm
ent P
roje
ct (S
PN)
• A
irpor
ts D
evel
opm
ent P
roje
ct II
(LEN
) •
Rai
lway
s Res
truct
urin
g Pr
ojec
t (LE
N)
• R
oad
Ass
ets M
anag
emen
t Pro
ject
(LEN
) •
Urb
an T
rans
port
Infr
astru
ctur
e Pr
ojec
t (L
EN)
• Tr
ansp
ort s
ecto
r stra
tegy
(ESW
) •
Gre
ater
Cai
ro d
evel
opm
ent (
ESW
) •
PPP
Cai
ro-A
lexa
ndria
free
way
(IFC
TA
)
Tele
com
mun
icat
ions
• R
educ
tion
in th
e co
st o
f te
leco
mm
unic
atio
ns se
rvic
es –
by
end
-CA
S
• Su
bsta
ntia
l (fe
e-ba
sed)
tech
nica
l as
sist
ance
was
pro
vide
d to
im
prov
e th
e re
gula
tory
fr
amew
ork
and
incr
ease
the
num
ber o
f lic
ense
d op
erat
ors
• A
war
d of
a se
cond
nat
iona
l fix
ed li
ne o
pera
tor l
icen
se
Mod
e of
inte
rven
tion:
Tec
hnic
al a
ssis
tanc
e by
bot
h IB
RD (f
ee-b
ased
) and
IFC
• Su
ppor
t to
regu
lato
ry re
form
(IB
RD
fee-
base
d TA
)
Wat
er, s
anita
tion
and
irrig
atio
n
• Su
cces
sful
test
ing
(for
an
even
tual
scal
ing-
up) o
f pilo
t sc
hem
es fo
r (i)
expa
ndin
g w
ater
infr
astru
ctur
e in
to ru
ral
area
s; a
nd (i
i) in
crea
sing
be
nefic
iary
par
ticip
atio
n; a
nd
(iii)
deve
lopi
ng P
PPs –
by
end-
CA
S
• Im
plem
enta
tion
of p
ilot s
chem
es
is u
nder
way
for c
omm
unity
pa
rtic
ipat
ion
in ir
riga
tion
• A
pilo
t sch
eme
for P
PP in
ir
riga
tion
has b
een
laun
ched
(p
rocu
rem
ent i
s und
erw
ay) F
irst
w
aste
wat
er P
PP in
Egy
pt is
on
goin
g
• Si
gnifi
cant
pro
porti
on o
f co
mm
unity
org
aniz
atio
ns fo
r pa
rtici
patio
n in
irrig
atio
n op
erat
ing
in a
sust
aina
ble
man
ner;
effe
ctiv
e la
unch
of a
su
bsta
ntiv
e di
alog
ue o
n th
e sc
alin
g up
/ ad
just
men
t of
the
mod
el
• Se
lect
ion
of p
rivat
e op
erat
or
for i
rrig
atio
n PP
P co
mpl
eted
; ac
tual
laun
ch o
f act
iviti
es
Mod
e of
inte
rven
tion:
IBRD
lend
ing
for
pilo
t act
iviti
es u
nder
pinn
ed b
y an
alyt
ical
w
ork
• In
tegr
ated
Irrig
atio
n Im
prov
emen
t and
M
oder
niza
tion
Proj
ect (
SPN
) •
Inte
grat
ed S
ewag
e an
d Sa
nita
tion
Infr
astru
ctur
e Pr
ojec
t (SP
N)
• W
est D
elta
Wat
er C
onse
rvat
ion
and
Irrig
atio
n Pr
ojec
t (SP
N)
• A
dditi
onal
fina
ncin
g on
Nat
iona
l D
rain
age
II (L
EN)
• PP
P on
Pum
ps P
roje
ct (L
EN)
• La
ke N
asse
r Pro
ject
(LEN
) •
Lake
Nas
ser/c
limat
e ch
ange
(IB
RD
TA
) •
Wat
er se
ctor
stra
tegy
(ESW
) •
New
Cai
ro p
otab
le w
ater
PPP
and
w
aste
-wat
er P
PP (I
FC T
A)
20
2.3.
Impr
ove
air
and
wat
er q
ualit
y
• Im
prov
e en
viro
nmen
tal
stan
dard
s for
air
and
wat
er
pollu
tion
and
stre
ngth
en
thei
r enf
orce
men
t inc
ludi
ng
by d
evel
opin
g m
arke
t-fr
iend
ly in
cent
ives
for
pollu
ters
to re
duce
pol
lutio
n
• Su
cces
sful
test
ing
(for
an
even
tual
scal
ing-
up) o
f pilo
t sc
hem
es fo
r: (i)
redu
ctio
n of
in
dust
rial a
ir po
llutio
n; a
nd (i
i) w
aste
man
agem
ent –
by
end-
CA
S
• Im
prov
emen
t of e
nviro
nmen
tal
stan
dard
s reg
ulat
ions
– b
y en
d-C
AS
• Im
plem
enta
tion
of a
pilo
t sch
eme
for r
educ
ing
indu
stri
al a
ir
pollu
tion
is w
ell u
nder
way
; a
pilo
t sch
eme
for w
aste
m
anag
emen
t is u
nder
pr
epar
atio
n
• Si
gnifi
cant
pro
gres
s was
ac
hiev
ed o
n en
viro
nmen
tal
stan
dard
s: c
ount
ry sy
stem
s are
pa
rtly
app
licab
le fo
r Ban
k pr
ojec
ts
• Ef
fect
ive
laun
ch o
f a
subs
tant
ive
dial
ogue
on
the
scal
ing
up /
adju
stm
ent o
f th
e pi
lot s
chem
e fo
r in
dust
rial a
ir po
llutio
n ab
atem
ent
• La
unch
of a
pilo
t sch
eme
for
was
te m
anag
emen
t pol
lutio
n ab
atem
ent
Mod
e of
inte
rven
tion:
IBRD
lend
ing
for
pilo
t act
iviti
es a
nd st
and-
alon
e an
alyt
ical
w
ork
• Po
llutio
n A
bate
men
t Pro
ject
II (S
PN)
• So
lid W
aste
Man
agem
ent P
roje
ct (L
EN)
• U
pdat
e of
Cou
ntry
Env
ironm
ent
Ana
lysi
s (ES
W)
• C
limat
e ch
ange
miti
gatio
n an
d ad
apta
tion
(ESW
) •
Envi
ronm
ent s
trate
gy (E
SW)
2.4.
Incr
ease
rel
evan
ce o
f edu
catio
n fo
r la
bor
mar
ket
• Pu
rsue
eff
orts
to in
crea
se
acce
ss to
all
leve
ls o
f ed
ucat
ion
( gro
ss
enro
llmen
t rat
io in
crea
sed
to 1
6 pe
rcen
t in
pre-
scho
ol,
94 p
erce
nt in
pri
mar
y, a
nd
84 p
erce
nt in
seco
ndar
y)
• R
educ
e th
e m
ism
atch
be
twee
n cu
rric
ulum
and
la
bor m
arke
t nee
ds (i
n a
soci
al e
nviro
nmen
t whe
re
curr
icul
um re
form
is
diff
icul
t), in
par
ticul
ar b
y st
reng
then
ing
the
linka
ges
betw
een
the
educ
atio
n sy
stem
and
pot
entia
l em
ploy
ers
• Su
cces
sful
tes
ting
(for
an
even
tual
scal
ing-
up) o
f pilo
t sc
hem
es fo
r im
prov
ing
qual
ity/re
leva
nce
of: (
i) hi
gher
ed
ucat
ion,
(ii)
skill
s de
velo
pmen
t, an
d (ii
i) ea
rly
child
hood
dev
elop
men
t – b
y en
d-C
AS
• Im
prov
ed c
urric
ulum
esp
ecia
lly
with
rega
rd to
the
trans
ition
fr
om se
cond
ary
to h
ighe
r and
vo
catio
nal e
duca
tion
– by
end
-C
AS
• Im
plem
enta
tion
of p
ilot s
chem
es
is u
nder
way
for (
i) hi
gher
ed
ucat
ion;
(ii)
skill
s de
velo
pmen
t; an
d (ii
i) ea
rly
child
hood
dev
elop
men
t and
( iv)
Sc
hool
PPP
und
erw
ay (I
FC)
• C
urri
culu
m fo
r the
firs
t yea
r of
seco
ndar
y sc
hool
is b
eing
re
vise
d an
d is
exp
ecte
d to
be
rolle
d ou
t in
Fall
2008
. Se
cond
an
d th
ird
year
seco
ndar
y cu
rric
ulum
refo
rms a
re st
ill a
t a
dial
ogue
stag
e.
• Su
cces
sful
com
plet
ion
of th
e pi
lot s
chem
es a
nd e
ffec
tive
laun
ch o
f a su
bsta
ntiv
e di
alog
ue o
n th
eir s
calin
g up
/ ad
just
men
t
Mod
e of
inte
rven
tion:
IBRD
lend
ing
for
pilo
t act
iviti
es a
nd st
and-
alon
e an
alyt
ical
w
ork
• Ea
rly C
hild
hood
Edu
catio
n En
hanc
emen
t Pro
ject
(SPN
) •
Seco
ndar
y Ed
ucat
ion
Enha
ncem
ent
Proj
ect (
SPN
) •
Hig
her E
duca
tion
Proj
ect (
SPN
) •
Skill
s Dev
elop
men
t Pro
ject
(SPN
) •
Post
-bas
ic E
duca
tion
Ref
orm
Pro
ject
(L
EN)
• A
naly
tical
wor
k on
the
linka
ges b
etw
een
high
er e
duca
tion,
voc
atio
nal e
duca
tion
/ sk
ills d
evel
opm
ent,
and
the
labo
r mar
ket
need
s (ES
W)
• A
naly
tical
wor
k on
terti
ary
educ
atio
n qu
ality
and
rele
vanc
e (E
SW)
• Y
outh
stud
y (E
SW)
• W
BI S
trate
gic
Cho
ices
for E
duca
tion
Ref
orm
(TA
) •
Scho
ols P
PP (I
FC T
A)
• Pr
ivat
e pr
ovis
ion
of e
duca
tion
serv
ices
(I
FC)
• Se
tting
up
stud
ent l
oan
prog
ram
(IFC
)
21
2.5. Strengthen public sector performance
and lack of transparency
Gradually decentralize delivery of selected public services
Improve perceptions of public service inefficiency
Thefindings and recommendations of sectoral PER notes were published on the internet
Increased rating on governance and transparency scorecards issued by major independent observatories of perceptions of transparency - by end-CAS
Adhesion to EITI
Launch of a formal program to improve perceptions of public sector transparency
Mode o f intervention: IBRD technical assistance (including fee-based) and hands-on analytical work
Country Procurement Assessment Update (ESW) Support to procurement reform (TA) EITI (TA) Support to TAC(TA) WBI Local Governance Management
1 3.1. Develor, targeted and sustainable safetv nets I Transform current subsidy system into a better targeted and fiscal1 y sustainable system
Definition and implementation of a sound plan to move towards a more transparent and sustainable system
Increase sustainability and coverage of the pension systems
Technical advice was provided to the Government on subsidy reform and cash transfer mechanisms: design of options
Definition and implementation of new pension regulations reflecting international best practices
Technical advice was provided to the Government (on a fee-based basis) on pension law and relevant regulations
and timetables, organization of South-South exchange of experience (with Mexico), capacity building of selected institutions to be involved in the reform
Preparation of an implementation plan for subsidy reform informed by international best practice
Mode o f intervention: Hands-on technical assistance by IBRD (including fee-based), possibly supported by DPLs (if requested by the Government)
Completion of the technical work on pension reform (including regulations and actuarial work)
Social protection DPL (LEN) Social policy reform: subsidies and safety net (TA) Pension reform (RTA) Poverty monitoring / analysis (TA)
23
3.2.
Red
uce
inte
rreg
iona
l dis
pari
ties
• In
crea
se p
ublic
inve
stm
ents
in
Upp
er E
gypt
(ave
rage
pe
r cap
ita tr
ansf
ers t
o U
pper
Egy
pt G
over
nora
tes
incr
ease
d fr
om 7
9% o
f all-
Egyp
t ave
rage
(200
3/20
04)
to o
ver 1
00 p
erce
nt o
f all-
Egyp
t ave
rage
)
• St
reng
then
cap
acity
am
ong
loca
l adm
inis
trativ
e au
thor
ities
and
com
mun
ity
grou
ps in
Upp
er E
gypt
• St
rong
pro
-poo
r tar
getin
g of
pu
blic
inve
stm
ent i
n U
pper
Eg
ypt –
by
end-
CA
S
• An
alyt
ical
wor
k on
Upp
er E
gypt
co
nstr
aint
s and
opp
ortu
nitie
s is
unde
rway
• M
echa
nism
s for
com
mun
ity-le
vel
inve
stm
ent i
n U
pper
Egy
pt w
ere
succ
essf
ully
test
ed
• A
dopt
ion
by th
e G
over
nmen
t of
the
findi
ngs a
nd
reco
mm
enda
tion
of
anal
ytic
al w
ork
on U
pper
Eg
ypt s
ourc
es o
f gro
wth
and
po
verty
Mod
e of
inte
rven
tion:
IBRD
lend
ing
for
com
mun
ity-le
vel a
ctiv
ities
and
stan
d-al
one
anal
ytic
al w
ork
• U
pper
Egy
pt In
tegr
ated
Gov
erno
rate
s Pr
ojec
t (LE
N)
• A
gric
ultu
re su
pply
cha
ins i
n U
pper
Eg
ypt (
TA)
• Su
ppor
t to
deve
lopi
ng a
dec
entra
lizat
ion
stra
tegy
(TA
)
3.3.
Exp
and
acce
ss to
hea
lthca
re
• Ex
pand
cov
erag
e of
hea
lth
insu
ranc
e sy
stem
s in
a fis
cally
sust
aina
ble
man
ner
• A
dopt
ion
of a
hea
lth in
sura
nce
refo
rm re
flect
ing
inte
rnat
iona
l be
st p
ract
ice
– by
end
-CA
S
• Im
plem
enta
tion
of fa
mily
hea
lth
fund
s was
pilo
ted
in tw
o go
vern
orat
es (M
enof
ia a
nd
Alex
andr
ia):
bas
ic h
ealth
be
nefit
s cov
erag
e in
crea
sed
to 4
5 pe
rcen
t of t
he p
opul
atio
n in
thes
e go
vern
orat
es; u
tiliz
atio
n ra
tes o
f fa
mily
hea
lth se
rvic
es in
crea
sed
to
88
perc
ent o
f the
pop
ulat
ion
in
thes
e go
vern
orat
es
• Tw
o ho
spita
l PPP
s und
erw
ay
and
prog
ress
tow
ards
pri
vate
pr
ovis
ion
of h
ealth
serv
ices
• C
ompl
etio
n an
d ad
optio
n of
ac
tuar
ial s
tudi
es a
nd a
n im
plem
enta
tion
plan
for
rolli
ng o
ut th
e re
form
Mod
e of
inte
rven
tion:
Inte
grat
ed p
acka
ge
of a
naly
tical
wor
k, te
chni
cal a
ssis
tanc
e,
IBRD
lend
ing
and
IFC
fina
ncia
l sup
port
• H
ealth
sect
or re
form
pro
ject
(SPN
) •
Fam
ily h
ealth
insu
ranc
e pr
ojec
t (LE
N)
• So
cial
hea
lth in
sura
nce
inst
itutio
n bu
ildin
g pr
ojec
t (LE
N)
• H
ealth
/pop
ulat
ion
stra
tegy
(IB
RD
TA
an
d ES
W)
• H
ealth
insu
ranc
e re
form
(TA
) •
Priv
ate
prov
isio
n of
hea
lth se
rvic
es
(IFC
) •
PPP
on tw
o ho
spita
ls in
Ale
xand
ria (I
FC
TA)
3.4.
Red
uce
gend
er d
ispa
ritie
s •
Focu
s on
redu
cing
in
equa
litie
s rel
ated
to
econ
omic
em
pow
erm
ent
• Ef
fect
ive
cont
ribut
ion
to
info
rmed
adv
ocac
y an
d po
licy
mak
ing
on g
ende
r iss
ues –
by
end-
CA
S
• C
apac
ity o
f sel
ecte
d w
omen
gr
oups
to e
ngag
e in
gen
der
polic
y is
sues
was
stre
ngth
ened
• A
dopt
ion
by th
e G
over
nmen
t of
the
findi
ngs a
nd
reco
mm
enda
tions
of B
ank
anal
ytic
al w
ork
on g
ende
r an
d ec
onom
ic o
ppor
tuni
ties
Mod
e of
inte
rven
tion:
ben
chm
arki
ng
thro
ugh
anal
ytic
al w
ork
and
tech
nica
l as
sist
ance
•
Gen
der A
sses
smen
t Upd
ate
(ESW
) •
Cap
acity
bui
ldin
g of
the
Nat
iona
l C
ounc
il of
Wom
en (T
A)
Annex 2
24
FY09 FY10 FY11
Support to procurement reform Support to procurement reform Support to procurement reformEITI EITI EITISupport for PPP Support for PPP Support for PPPEnergy pricing and subsidy strategy Energy pricing and subsidy strategy Energy pricing and subsidy strategySupport to regional gas pipeline development Support to regional gas pipeline development Support to regional gas pipeline developmentSupport for education to labor market reforms Support for education to labor market reforms Support for education to labor market reformsPoverty monitoring / analysis support Poverty monitoring / analysis support Poverty monitoring / analysis supportHealth (peer review of Government strategy) Health (peer review of Government strategy) Health (peer review of Government strategy)Support to decentralization Support to decentralization Support to decentralization
est)
fety net
tes
I Update
)*50 m)*
ry ($100 m)*
eparation. FY
TECHNICAL ASSISTANCEProgrammatic technical assistance (continuous throughout the period)
Access to finance Access to finance Access to financeCapital markets strengthening Capital markets strengthening Capital markets strengtheningFinancial sector reform Financial sector reform Financial sector reformValue-chain / Trade Value-chain / Trade Value-chain / Trade
Commercial wind development framework Agriculture and ICT TBD (based on Government requLake Nasser and climate change TBD (based on Government request)Agriculture supply chains in Upper Egypt
Telecoms reform Telecoms reform Telecoms reformSocial policy reform: subsidies, safety net Social policy reform: subsidies, safety net Social policy reform: subsidies, saPension reform Pension reform Pension reformAsset management (RAMP) Asset management (RAMP) Asset management (RAMP)Support to TAC (transparency) Support to TAC (transparency) Support to TAC (transparency)Health insurance Health insurance Health insurance
Sectoral competitiveness policy notes Sectoral competitiveness policy notes Sectoral competitiveness policy noMacro report Macro report Macro reportPER notes PER notes PER notes
nvestment Climate Update (incl. enterpr. data) Islamic non-bank finance development report Investment Climate UpdateServices trade report Overall Productivity / Competitiveness note Country Procurement AssessmentEmployment growth policy note Greater Cairo Development Energy sector strategyHigher education policy note Skills development policy note Water sector strategyVocational education policy note Update of Country Environment Analysis Environment strategyAccess to finance / microfinance Climate change report Transport sector strategyYouth study Health and population strategyCapital markets reformGender assessment update
Additional financing for mortgage ($50 m)* Facilitating access to finance ($50 m)* Power III ($350 m)*Low income social housing ($200 m)* Gas infrastructure ($150 m)* Clean technology for energy (TBDPower II (Ain Sokhna) ($600 m) Airports II (Sharm Sheikh/Hurghada) ($230 m) Urban transport infrastructure ($1Railways restructuring ($120 m) Road assets management ($200 m)* Lake Nasser ($200 m)*Add. financing for national drainage II ($70 m)* Post-basic education reform ($50 m)* Population ($50 m)*Family health insurance ($75 m) Social protection DPL ($200 m)* Solid waste ($40 m)*
Social health insurance inst. building ($50 m)* Agriculture/poultry industry recoveUpper Egypt integrated development ($200 m)* PPP on pumps ($100 m)*
Total lending: $1,115 m Total lending: $1,130 m Total lending: $990 m
Note: Indicative amounts may be adjusted. Government to formally confirm priority for borrowing for projects with * before further prmay be advanced in some cases.
Fee-based technical assistance
ECONOMIC AND SECTOR WORK
LENDING
Punctual technical assistance
Programmatic ESW (one piece a year on a given topic)
Punctual ESW
Annex 2: Planned IBRD Activities in the Period FY09 - FY11
Ann
ex 2
B
An
nex
2B
: P
lan
ned
IBR
D A
ctiv
itie
s F
or
FY
09-F
Y11
(b
y S
trat
egic
Th
eme)
I. F
AC
ILIT
AT
ING
PR
IVA
TE
SE
CT
OR
DE
VE
LO
PM
EN
T
Imp
rove
fin
anci
al s
ecto
r co
mp
etit
ieve
nss
an
d e
ffic
ien
cy
The
mat
ic fo
cus:
(i) F
urth
er s
uppo
rt to
are
as o
f pre
viou
s in
volv
emen
t (m
ortg
age,
cap
ital m
arke
ts);
(ii)
Exp
ansi
on to
em
ergi
ng p
riorit
ies
(fin
ance
for
the
poor
, Isl
amic
fina
nce)
Inst
rum
ents
:(i)
Con
tinuo
us T
A th
roug
hout
the
perio
d; (
ii) F
ocus
ed fi
nanc
ial i
nter
med
iatio
n / i
nves
tmen
t pro
ject
s; (
iii)
One
-tim
e an
alyt
ical
pie
ces
Pro
pose
d ac
tiviti
es:
Add
ition
al fi
nanc
ing
for
Mor
tgag
e pr
ojec
t*Lo
an50
mill
ion
FY
09S
calin
g up
of M
ortg
age
proj
ect (
poss
ibly
loca
l cur
renc
y bo
rrow
ing)
Low
-inco
me
hous
ing
finan
ce p
roje
ct*
Loan
200
mill
ion
FY
09P
er G
over
nmen
t req
uest
Acc
ess
to fi
nanc
e T
AT
A
Con
tinuo
usT
o he
lp in
crea
se a
cces
s to
the
poor
, mic
rocr
edit,
etc
. (C
GA
P)
Fac
ilita
ting
acce
ss to
fina
nce
proj
ect*
Loan
50m
illio
nF
Y10
Mic
ro-c
redi
t, le
asin
g, m
icro
insu
ranc
e, e
tc.
Fin
anci
al s
ecto
r re
form
TA
TA
C
ontin
uous
To
supp
ort r
efor
ms
thro
ugho
ut th
e pe
riod
as d
eman
d m
ay e
volv
eIs
lam
ic n
on-b
ank
finan
cial
ser
vice
s re
port
ES
WF
Y10
One
-tim
e re
port
- T
o ta
ke s
tock
and
pro
pose
a w
ay fo
rwar
dM
icro
finan
ce r
epor
tE
SW
FY
09R
epor
t on
enha
ncin
g ac
cess
to fi
nanc
e w
ith fo
cus
on m
icro
, sm
all a
nd m
ediu
m e
nter
pris
esC
apita
l mar
kets
ref
orm
TA
TA
C
ontin
uous
to a
ccom
pany
and
follo
w u
p on
ES
WC
apita
l mar
ket s
tren
ghte
ning
rep
ort
ES
WF
Y09
Und
erw
ay -
To
take
sto
ck a
nd m
ap a
way
forw
ard
on s
tren
gthe
ning
cap
ital m
arke
ts
Cap
ital m
arke
ts s
tren
gthe
ning
TA
TA
C
ontin
uous
To
acco
mpa
ny a
nd fo
llow
up
on th
e E
SW
Ass
et m
anag
emen
t (R
AM
P)
RT
AR
TA
Con
tinuo
usR
TA
by
IBR
D T
reas
ury
Incr
ease
tra
de
wit
h r
egio
nal
an
d g
lob
al p
artn
ers
The
mat
ic fo
cus:
Con
tinua
tion
and
expa
nsio
n of
pre
viou
s an
d on
goin
g w
ork.
Inst
rum
ents
:(i)
Con
tinuo
us T
A th
roug
hout
the
perio
d; (
ii) O
ne-t
ime
anal
ytic
al p
iece
on
serv
ices
trad
e
Pro
pose
d ac
tiviti
es:
Ser
vice
s tr
ade
repo
rtE
SW
FY
09P
er G
over
nmen
t req
uest
Val
ue-c
hain
TA
TA
C
ontin
uous
Con
tinua
tion
of e
arlie
r w
ork
Incr
ease
pri
vate
bu
sin
ess
acti
vity
The
mat
ic fo
cus:
(i) C
ontin
ued
supp
ort t
o ov
eral
l bus
ines
s en
viro
nmen
t ref
orm
s; (
ii) In
crea
sed
focu
s on
spe
cific
sec
tors
(in
clud
ing
agric
ultu
re).
Inst
rum
ents
:(i)
Reg
ular
upd
ates
of i
nves
tmen
t clim
ate
(eve
ry 2
/3 y
ears
); (
ii) S
ecto
ral c
ompe
titiv
enes
s po
licy
note
s (o
ne s
ecto
r a
year
);(ii
i) O
ne-t
ime
repo
rt o
n ov
eral
l com
petit
iven
ess
base
d on
ent
erpr
ises
cen
sus.
Pro
pose
d ac
tiviti
es:
Inve
stm
ent c
limat
e up
date
rep
ort
ES
WF
Y09
- F
Y11
Req
uest
ed b
y G
over
nmen
t, on
e re
port
eve
ry 2
/3 y
ears
Ove
rall
prod
uctiv
ity/c
ompe
titiv
enes
s no
teE
SW
FY
10B
ased
on
ente
rpris
es d
ata
Sec
tora
l com
petit
iven
ess
polic
y no
tes
ES
WO
ne a
yea
rD
etai
led
look
at a
key
sec
tor,
one
sec
tor
a ye
arA
gric
ultu
re/P
oultr
y in
dust
ry r
ecov
ery
proj
ect*
Loan
100
mill
ion
FY
11B
ased
on
curr
ent a
vian
flu
proj
ect
Agr
icul
ture
and
ICT
TA
TA
FY
10U
nder
way
Sup
port
for
PP
P T
AT
AC
ontin
uous
To
supp
ort r
efor
ms
thro
ugho
ut th
e pe
riod
as d
eman
d m
ay e
volv
e
II. E
NH
AN
CIN
G T
HE
PR
OV
ISIO
N O
F P
UB
LIC
SE
RV
ICE
S
Co
nso
lidat
e m
acro
eco
no
mic
sta
bili
ty
The
mat
ic fo
cus:
(i) M
acro
eco
nom
ic a
naly
sis;
(ii)
Pub
lic e
xpen
ditu
re m
anag
emen
t; (ii
i) P
rocu
rem
ent;
(iv)
Ext
ract
ive
indu
strie
s m
anag
emen
t.In
stru
men
ts:
(i) A
nnua
l rep
orts
on
spec
ific
issu
es (
for
mac
ro a
nd p
ublic
exp
endi
ture
); (
ii) C
ontin
uous
TA
thro
ugho
ut th
e pe
riod
(pro
cure
men
t, E
ITI)
.
Pro
pose
d ac
tiviti
es:
Mac
ro r
epor
tE
SW
One
a y
ear
Ove
rall
repo
rt +
hig
hlig
ht o
n a
spec
ific
topi
c ev
ery
year
PE
R n
otes
ES
WO
ne a
yea
rF
ocus
on
a sp
ecifi
c se
ctor
eve
ry y
ear
25
Ann
ex 2
B
Exp
and
an
d m
od
ern
ize
infr
astr
uct
ure
ser
vice
s
The
mat
ic fo
cus:
(i) In
vest
men
ts fi
nanc
ing;
(ii)
Sup
port
to r
efor
ms
(esp
. pric
ing,
sec
tor
man
agem
ent,
PP
P);
(iii
) S
peci
fic a
ctiv
ities
(G
reat
er C
airo
, reg
iona
l gas
pip
elin
e).
Inst
rum
ents
:(i)
Sec
tora
l Inv
estm
ent L
oans
(bu
ildin
g on
pas
t suc
cess
es);
(ii)
Con
tinuo
us T
A th
roug
hout
the
perio
d; (
iii)
One
-tim
e T
A /
repo
rt o
n sp
ecifi
c is
sues
;(iv
) S
ecto
r st
rate
gy r
epor
ts a
t the
end
of t
he p
erio
d to
pav
e th
e w
ay fo
r th
e pe
riod
ahea
d.
Pro
pose
d ac
tiviti
es:
Pow
er II
pro
ject
(A
in S
okhn
a P
ower
Pla
nt)
Loan
600
mill
ion
FY
09B
ased
on
succ
essf
ul E
l-Teb
bin
pow
er p
roje
ctP
ower
III p
roje
ct*
Loan
350
mill
ion
FY
11T
o be
det
erm
ined
Ene
rgy
pric
ing
and
subs
idy
stra
tegy
TA
TA
C
ontin
uous
Exp
ecte
d to
incl
ude
deta
iled
anal
ytic
al w
ork
as n
eede
dC
omm
erci
al w
ind
deve
lopm
ent f
ram
ewor
k T
AT
A
FY
09O
ne-t
ime
assi
stan
ceG
as in
fras
truc
ture
pro
ject
*Lo
an15
0m
illio
nF
Y10
Sca
ling
up o
f rec
ent g
as p
roje
ctS
uppo
rt to
reg
iona
l gas
pip
elin
e de
velo
pmen
t TA
TA
C
ontin
uous
Per
rec
ent d
iscu
ssio
ns
Ene
rgy
sect
or s
trat
egy
repo
rtE
SW
FY
11T
o id
entif
y pr
iorit
ies
for
perio
d ah
ead
Cle
an te
chno
logy
for
ener
gy p
roje
ct*
Loan
TB
Dm
illio
nF
Y11
To
be d
eter
min
ed
Hur
ghad
a/S
harm
el S
heik
h ai
rpor
ts p
roje
ctLo
an23
0m
illio
nF
Y10
Bas
ed o
n su
cces
sful
Airp
orts
I pr
ojec
tR
ailw
ays
rest
ruct
urin
g pr
ojec
tLo
an12
0m
illio
nF
Y09
Pre
para
tion
unde
rway
Roa
d as
sets
man
agem
ent p
roje
ct*
Loan
200
mill
ion
FY
10B
ased
on
earli
er a
naly
tical
wor
kU
rban
tran
spor
t inf
rast
ruct
ure
proj
ect*
Loan
150
mill
ion
FY
11P
ossi
ble
focu
s on
Gre
ater
Cai
roT
rans
port
sec
tor
stra
tegy
rep
ort
ES
WF
Y11
To
iden
tify
prio
ritie
s fo
r pe
riod
ahea
dG
reat
er C
airo
dev
elop
men
t rep
ort
ES
W
FY
10O
ne-t
ime
repo
rt
Add
ition
al fi
nanc
ing
for
Nat
iona
l Dra
inag
e II
proj
ect*
Loan
70m
illio
nF
Y09
Sca
ling
up o
f suc
cess
ful d
rain
age
proj
ect
PP
P o
n pu
mps
pro
ject
*Lo
an10
0m
illio
nF
Y11
Inno
vativ
e sc
hem
e to
impr
ove
pum
ping
man
agem
ent
Lake
Nas
ser
and
clim
ate
chan
ge T
AT
AF
Y09
Per
ong
oing
dis
cuss
ions
with
tech
nica
l cou
nter
part
sLa
ke N
asse
r pr
ojec
t*Lo
an20
0m
illio
nF
Y11
Per
ong
oing
dis
cuss
ions
with
tech
nica
l cou
nter
part
sW
ater
sec
tor
stra
tegy
rep
ort
ES
WF
Y11
To
iden
tify
prio
ritie
s fo
r pe
riod
ahea
d
Tel
ecom
s re
form
RT
AR
TA
FY
09A
s pe
r se
ctor
al d
iscu
ssio
ns
Imp
rove
air
an
d w
ater
qu
alit
y
The
mat
ic fo
cus:
(i) S
calin
g up
of o
ngoi
ng, s
ucce
ssfu
l pilo
t act
iviti
es (
EP
AP
); (
ii) S
uppo
rt to
impr
ovem
ents
(an
d fu
rthe
r us
e) o
f cou
ntry
sys
tem
s; (
iii)
Ove
rall
sect
or a
naly
sis.
Inst
rum
ents
:(i)
Sec
tora
l rep
orts
; (ii)
A lo
an w
ithou
t sov
erei
gn g
uara
ntee
; (iii
) S
ecto
ral s
trat
egy
at th
e en
d of
the
perio
d to
info
rm th
e de
bate
on
the
way
ahe
ad.
Pro
pose
d ac
tiviti
es:
Sol
id w
aste
pro
ject
*Lo
an40
mill
ion
FY
11B
ased
on
succ
essf
ul E
PA
P, p
ossi
bly
non-
sove
reig
n lo
anU
pdat
e of
cou
ntry
env
ironm
ent a
naly
sis
repo
rtE
SW
FY
10T
o ex
pand
/ens
ure
soun
d us
e of
cou
ntry
sys
tem
s on
env
ironm
ent
Clim
ate
chan
ge r
epor
tE
SW
FY
10T
o as
sess
pot
entia
l im
pact
and
iden
tify
miti
gatio
n st
rate
gies
Env
ironm
ent s
trat
egy
repo
rtE
SW
FY
11T
o id
entif
y pr
iorit
ies
for
perio
d ah
ead
Incr
ease
rel
evan
ce o
f ed
uca
tio
n f
or
lab
or
mar
ket
T
hem
atic
focu
s:C
ompr
ehen
sive
app
roac
h to
"ge
tting
a fi
rst j
ob".
Inst
rum
ents
:(i)
Inte
grat
ed p
acka
ge o
f ana
lytic
al w
ork,
TA
, and
fina
ncin
g; (
ii) S
trat
egy
repo
rt a
t the
end
of t
he p
erio
d to
take
sto
ck a
nd p
ave
the
way
for
the
futu
re.
Pro
pose
d ac
tiviti
es:
Sup
port
for
educ
atio
n to
labo
r m
arke
t ref
orm
s T
AT
AC
ontin
uous
To
supp
ort r
efor
ms
thro
ugho
ut th
e pe
riod
as d
eman
d m
ay e
volv
eE
mpl
oym
ent g
row
th p
olic
y no
teE
SW
FY
09T
o id
entif
y st
rate
gies
for
empl
oym
ent g
row
th a
nd s
kills
sup
ply
Hig
her
educ
atio
n po
licy
note
ES
W
FY
09T
o id
entif
y st
rate
gies
for
bette
r m
atch
ing
of s
kills
with
dem
and
Voc
atio
nal e
duca
tion
polic
y no
teE
SW
FY
09T
o id
entif
y st
rate
gies
for
bette
r m
atch
ing
of s
kills
with
dem
and
Ski
lls d
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ort
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ppor
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26
Ann
ex 2
B (C
ontin
ued)
27
Str
eng
then
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blic
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tor
per
form
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mat
ic fo
cus:
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uaria
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dies
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tion
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ion
FY
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reng
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lth in
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nce
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astr
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re to
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nive
ral a
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uous
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view
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t str
ateg
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o id
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y pr
iorit
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eter
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o im
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try
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ontin
uous
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men
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ries
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agem
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l rep
orts
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ific
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pose
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lic e
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port
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efor
m T
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ry p
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ent a
sses
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t upd
ate
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AS
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C (
tran
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TA
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OM
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UIT
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elo
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arg
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d s
ust
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ety
net
s
The
mat
ic fo
cus:
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ontin
uatio
n of
ong
oing
wor
k on
sub
sidy
ref
orIn
stru
men
ts:
m; (
ii) S
calin
g up
of p
over
ty m
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ring.
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ontin
uous
TA
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riod;
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pose
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form
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t TA
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ial p
rote
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ect*
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erty
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itorin
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naly
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ort T
AE
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A
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uce
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isp
arit
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mat
ic fo
cus:
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erw
ayLo
an20
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ditio
nal o
n G
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r D
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uous
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gypt
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ort a
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rmin
ed w
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are
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mat
ic fo
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ocal
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nder
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xpan
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ealth
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e; (
ii) O
vera
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atio
n st
rate
gy.
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tegr
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ay fo
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lth in
sura
nce
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amily
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lth in
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nce
proj
ect
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ial h
ealth
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ranc
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st. b
uild
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ect*
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lth s
trat
egy
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lth a
nd p
opul
atio
n st
rate
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epor
tP
opul
atio
n pr
ojec
t*
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uce
gen
der
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par
itie
s
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mat
ic fo
cus:
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nom
ic o
ppor
tuni
ties
for
wom
enIn
stru
men
ts:
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naly
tical
wor
k; (
ii) T
A to
adv
ocac
y or
gani
zati
Pro
pose
d ac
tiviti
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ons
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der
asse
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ent u
pdat
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port
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tal l
end
ing
(en
tire
per
iod
)
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e: G
over
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t to
form
ally
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firm
prio
rity
for
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g fo
r pr
ojec
ts w
i
ES
WF
Y09
Foc
us o
n ec
onom
ic o
ppor
tuni
ties
3235
mill
ion
th a
* b
efor
e fu
rthe
r pr
epar
atio
n. F
Y m
ay b
e ad
vanc
ed in
som
e ca
ses.
Annex A1
Egypt, Arab Rep. at a glance 10/2/07
M. East Lower-POVERTY and SOCIAL & North middle-
Egypt Africa income2006Population, mid-year (millions) 75.4 311 2,276GNI per capita (Atlas method, US$) 1,350 2,481 2,037GNI (Atlas method, US$ billions) 101.8 771 4,635
Average annual growth, 2000-06
Population (%) 1.9 1.8 0.9Labor force (%) 2.7 3.5 1.4
Most recent estimate (latest year available, 2000-06)
Poverty (% of population below national poverty line) 17 .. ..Urban population (% of total population) 43 57 47Life expectancy at birth (years) 71 70 71Infant mortality (per 1,000 live births) 28 43 31Child malnutrition (% of children under 5) 9 15 13Access to an improved water source (% of population) 98 90 81Literacy (% of population age 15+) 71 73 89Gross primary enrollment (% of school-age population) 101 103 113 Male 104 106 117 Female 97 99 114
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1986 1996 2005 2006
GDP (US$ billions) 35.9 67.6 89.7 107.5Gross capital formation/GDP 23.7 18.1 18.0 18.7Exports of goods and services/GDP 15.7 20.7 30.3 31.3Gross domestic savings/GDP 13.8 12.7 15.7 16.3Gross national savings/GDP .. 18.1 21.4 22.1
Current account balance/GDP -9.4 -0.3 3.2 1.6Interest payments/GDP 2.8 1.6 0.8 ..Total debt/GDP 111.2 46.6 38.0 ..Total debt service/exports 27.0 12.9 7.7 ..Present value of debt/GDP .. .. 33.4 ..Present value of debt/exports .. .. 90.2 ..
1986-96 1996-06 2005 2006 2006-10(average annual growth)GDP 4.0 4.4 4.5 6.8 ..GDP per capita 1.9 2.4 2.5 4.9 ..Exports of goods and services 7.2 5.7 22.5 .. ..
STRUCTURE of the ECONOMY1986 1996 2005 2006
(% of GDP)Agriculture 20.8 17.3 14.9 ..Industry 26.8 31.6 36.1 .. Manufacturing 13.3 17.7 16.8 ..Services 52.4 51.1 49.0 ..
Household final consumption expenditure 69.6 76.9 71.6 71.4General gov't final consumption expenditure 16.5 10.4 12.7 12.3Imports of goods and services 25.6 26.2 32.6 33.7
1986-96 1996-06 2005 2006(average annual growth)Agriculture 2.8 3.5 3.3 ..Industry 5.7 4.7 5.2 .. Manufacturing 5.1 5.2 4.5 ..Services 2.9 4.3 5.6 ..
Household final consumption expenditure 4.6 3.4 3.0 ..General gov't final consumption expenditure 1.7 3.3 2.8 ..Gross capital formation -3.5 3.7 10.3 ..Imports of goods and services 1.3 2.7 23.8 ..
Note: 2006 data are preliminary estimates.This table was produced from the Development Economics LDB database.* The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete.
-10
-5
0
5
10
15
01 02 03 04 05 06
GCF GDP
Growth of capital and GDP (%)
-10
0
10
20
30
01 02 03 04 05 06
Exports Imports
Growth of exports and imports (%)
Egypt, Arab Rep.Lower-middle-income group
Development diamond*
Life expectancy
Access to improved water source
GNIpercapita
Grossprimary
enrollment
Egypt, Arab Rep.
Lower-middle-income group
Economic ratios*
Trade
Indebtedness
Domesticsavings
Capital formation
28
Annex A1 Continued
Egypt, Arab Rep.
PRICES and GOVERNMENT FINANCE1986 1996 2005 2006
Domestic prices(% change)Consumer prices 23.9 7.2 4.9 7.6Implicit GDP deflator 12.8 6.9 6.2 7.4
Government finance(% of GDP, includes current grants)Current revenue 21.3 25.2 23.2 26.5Current budget balance -14.2 2.5 -4.2 -3.1Overall surplus/deficit -23.1 -1.3 -9.0 -6.2
TRADE1986 1996 2005 2006
(US$ millions)Total exports (fob) .. 4,609 14,000 19,036 Cotton .. 2,226 5,000 10,312 Other agriculture .. 109 106 123 Manufactures .. 1,314 5,529 6,091Total imports (cif) .. 14,107 23,100 30,653 Food .. 2,513 2,371 2,748 Fuel and energy .. 854 3,363 6,624 Capital goods .. 4,101 4,792 6,701
Export price index (2000=100) .. 105 138 150Import price index (2000=100) .. 118 128 135Terms of trade (2000=100) .. 90 108 111
BALANCE of PAYMENTS1986 1996 2005 2006
(US$ millions)Exports of goods and services 6,494 13,415 27,952 34,146Imports of goods and services 11,825 17,660 30,216 38,460Resource balance -5,331 -4,245 -2,263 -4,314
Net income -1,021 539 -254 499Net current transfers .. 3,521 5,428 5,729
Current account balance -3,357 -185 2,911 1,753
Financing items (net) 3,533 755 1,567 3,229Changes in net reserves -176 -570 -4,478 -4,982
Memo:Reserves including gold (US$ millions) .. .. 19,322 26,660Conversion rate (DEC, local/US$) 1.1 3.4 6.0 5.7
EXTERNAL DEBT and RESOURCE FLOWS1986 1996 2005 2006
(US$ millions)Total debt outstanding and disbursed 39,896 31,538 34,114 .. IBRD 1,368 1,075 492 544 IDA 846 1,090 1,420 1,481
Total debt service 2,703 2,326 2,539 .. IBRD 216 272 98 93 IDA 8 23 52 53
Composition of net resource flows Official grants 776 1,224 819 .. Official creditors 872 77 -810 .. Private creditors 769 -421 4,489 .. Foreign direct investment (net inflows) 1,217 636 5,376 .. Portfolio equity (net inflows) 0 0 729 ..
World Bank program Commitments 658 172 140 26 Disbursements 212 108 165 164 Principal repayments 103 192 118 108 Net flows 110 -84 48 56 Interest payments 121 102 32 39 Net transfers -11 -186 15 18
Note: This table was produced from the Development Economics LDB database. 10/2/07
-2
0
2
4
6
00 01 02 03 04 05 06
Current account balance to GDP (%)
0
10,000
20,000
30,000
40,000
00 01 02 03 04 05 06
Exports Imports
Export and import levels (US$ mill.)
0
5
10
15
01 02 03 04 05 06
GDP deflator CPI
Inflation (%)
G: 5,982A: 492
D: 1,945
B: 1,420
F: 4,674
E: 19,601
A - IBRDB - IDA C - IMF
D - Other multilateralE - BilateralF - PrivateG - Short-term
Composition of 2005 debt (US$ mill.)
29
Annex B2
As Of Date 04/21/2008
Indicator 2005 2006 2007 2008Portfolio AssessmentNumber of Projects Under Implementation a 14 16 15 16Average Implementation Period (years) b 5.3 5.2 4.8 4.1Percent of Problem Projects by Number a, c 7.1 6.3 13.3 6.3Percent of Problem Projects by Amount a, c 1.4 0.8 10.6 1.4Percent of Projects at Risk by Number a, d 7.1 6.3 13.3 6.3Percent of Projects at Risk by Amount a, d 1.4 0.8 10.6 1.4Disbursement Ratio (%) e 19.9 18.5 26.3 18.7Portfolio ManagementCPPR during the year (yes/no)Supervision Resources (total US$)Average Supervision (US$/project)
Memorandum Item Since FY 80 Last Five FYsProj Eval by OED by Number 89 9Proj Eval by OED by Amt (US$ millions) 4,232.4 301.1% of OED Projects Rated U or HU by Number 23.5 12.5% of OED Projects Rated U or HU by Amt 13.7 0.2
a. As shown in the Annual Report on Portfolio Performance (except for current FY).b. Average age of projects in the Bank's country portfolio.c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP).d. As defined under the Portfolio Improvement Program.e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only.* All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year.
Selected Indicators* of Bank Portfolio Performance and ManagementCAS Annex B2 - Egypt, Arab Rep
30
Annex B3
EGYPT - CAS Annex B3 - IBRD/IDA Program Summary As of Date: 03/24/2008
Proposed IBRD/IDA Base-Case Lending Program a
Fiscal year Project Identification US$(M)
Strategic Rewards b (H/M/L)
Implementation b
Risks (H/M/L)
2009 National Railways Restructuring 120 Ain Soukhna Power Project 600
Low Income Social Housing 200 Additional financing – Mortgage Project 50
Family Health Insurance 75 Additional Financing for National Drainage II 70 Result 1,115
2010 Facilitating Access to Finance 50 Gas Infrastructure 150 Airports II 230 Road Assets Management 200 Post Basic Education Reform 50 Social Protection (DPL) 200 Social Health Insurance Inst. Building 50 Upper Egypt Integrated Development 200
Overall Result 1,130
31
Annex B3 (Continued)
32
EGYPT – IFC and MIGA Programs
(As of Date: March 2008)
International Finance Corporation (IFC) Current IFC Portfolio
Debt ($m) Equity ($m) Quasi Equity ($m) Total ($m) 344.51 121.93 466.44
Investment Business -- Top sectors and Clients TA Business -- Top sectors Sector 1 Oil, Gas, Chemicals, & mining Sector 1 PPPartnership/Priv.
Sector 2 General Manufacturing Sector 2 Corporate Governance
Sector 3 Financial Markets Sector 3 Business Regulation Reform
Top client Indo Egyptian/Chemicals Ranking in Doing Business Report: 126
Percentage of economy in the informal sector: 35.1%
Multilateral Investment Guarantee Agency (MIGA) Currently active Total
# of Projects Guaranteed 2 5 Guarantees Gross Exposure ($m) 85 196
Guarantees -- Top sectors # of Technical Assistance Projects Sector 1 Infrastructure
(Telecom) 1
Sector 2 Infrastructure (Waste Mgt)
Ann
ex B
4
Su
mm
ary
of N
on L
endi
ng S
ervi
ces
Com
plet
ion
FY
Cost
($'00
0)
Audi
ence
Ob
jectiv
e Re
cent
Com
plet
ion
Ac
cess
to F
inanc
e
2006
25
2 Ba
nk, G
over
nmen
t Kn
owled
ge ge
nera
tion
Publi
c Lan
d Man
agem
ent
20
06
131
Gove
rnme
nt Kn
owled
ge ge
nera
tion
Publi
c Exp
endit
ure R
eview
2006
10
6 Gv
tt, Ba
nk, D
onor
Kn
owled
ge ge
nera
tion
Pens
ion R
eform
2006
23
9 Go
vern
ment,
Ban
k Kn
owled
ge ge
nera
tion,
prob
lem so
lving
Po
verty
& S
ocial
Impa
ct An
alysis
Safe
ty Ne
t
2006
28
4 Ba
nk, G
over
nmen
t Kn
owled
ge ge
nera
tion
Inves
tmen
t Clim
ate
20
06
335
Bank
, Gov
ernm
ent
Know
ledge
gene
ratio
n Up
per E
G Ch
allen
ges
20
06
205
Bank
, Gov
ernm
ent
Know
ledge
gene
ratio
n ES
MAP
: EG-
DEMA
ND M
ANAG
EMEN
T TA
20
06
Ba
nk, G
over
nmen
t Kn
owled
ge ge
nera
tion
Aid C
oord
inatio
n
2007
5
Bank
, Gov
ernm
ent
Know
ledge
gene
ratio
n ES
MAP
: EG-
Econ
omic
Cost
of Ga
s
2007
42
Ba
nk, G
over
nmen
t Kn
owled
ge ge
nera
tion
ESM
AP S
tructu
ring o
f PPP
in N
atur
al Ga
s
2007
Bank
, Gov
ernm
ent
Know
ledge
gene
ratio
n PE
R No
tes
20
07
64
Gove
rnme
nt, B
ank
Know
ledge
gene
ratio
n, pr
oblem
solvi
ng
Inves
tmen
t Clim
ate F
ollow
-up
20
07
146
Bank
, Gov
ernm
ent
Know
ledge
gene
ratio
n Po
verty
Upd
ate
20
07
132
Gove
rnme
nt, B
ank
Know
ledge
gene
ratio
n, pr
oblem
solvi
ng
Urba
n Sec
tor U
pdate
2007
19
7 Go
vern
ment
Know
ledge
gene
ratio
n Ed
ucati
on S
trateg
y
2007
22
3 Go
vern
ment
Know
ledge
gene
ratio
n Ro
ad A
sset
Mana
geme
nt
2007
23
0 Go
vern
ment
Know
ledge
gene
ratio
n ES
MAP
: EG-
Comb
ined
Cycle
Wor
ksho
p TA
20
07
Ba
nk, G
over
nmen
t Kn
owled
ge ge
nera
tion
RTA
Natl
Tele
com
TA
2007
Bank
, Gov
ernm
ent
Know
ledge
gene
ratio
n En
hanc
ing W
omen
Eco
nomi
c Par
ticipa
tion
TA
2007
43
Ba
nk, G
over
nmen
t Kn
owled
ge ge
nera
tion
RTA
Regu
lator
y Refo
rm
TA
2007
12
Ba
nk, G
over
nmen
t Kn
owled
ge ge
nera
tion
Trad
e TA
20
07
56
Bank
, Gov
ernm
ent
Know
ledge
gene
ratio
n On
goin
g
Publi
c Exp
endit
ure R
eview
2008
30
0 Ba
nk, G
over
nmen
t Kn
owled
ge ge
nera
tion
High
Edu
catio
n St
rateg
y
2008
15
0 Go
vern
ment,
Ban
k Kn
owled
ge ge
nera
tion,
prob
lem so
lving
Po
verty
Poli
cy N
otes
20
08
100
Bank
, Gov
ernm
ent
Know
ledge
gene
ratio
n Gr
owth
in Up
per E
gypt
20
08
100
Bank
, Gov
ernm
ent
Know
ledge
gene
ratio
n De
velop
ment
Polic
y Rev
iew
20
08
100
Bank
, Gov
ernm
ent
Know
ledge
gene
ratio
n St
rateg
y for
Opti
mal G
ener
ation
Plan
ning
20
08
40
Bank
, Gov
ernm
ent
Know
ledge
gene
ratio
n Do
Egy
ptian
Wom
en M
atter
to C
ompe
tition
2008
50
Ba
nk, G
over
nmen
t Kn
owled
ge ge
nera
tion
33
Ann
ex B
4 (C
ontin
ued)
34
ESM
AP: E
G-De
sign o
f Loa
d Mgt
Prog
ram
20
08
Ba
nk, G
over
nmen
t Kn
owled
ge ge
nera
tion
Affor
dable
Hou
sing
20
08
35
Bank
, Gov
ernm
ent
Know
ledge
gene
ratio
n Ho
using
Sec
tor R
eview
2008
10
0 Ba
nk, G
over
nmen
t Kn
owled
ge ge
nera
tion
PER
Polic
y Note
s
2008
14
0 RO
SC A
ccou
nting
2008
30
Su
ppor
t to N
ation
al Co
uncil
of W
omen
TA
20
08
20
Supp
ort to
You
th Co
nfere
nce
TA
2008
20
Di
alogu
e on T
VET
TA
2008
90
Di
alogu
e on S
afety
Net
TA
2008
30
Eg
ypt In
terna
l Mar
ket
TA
2008
10
0 RT
A Inf
o Tec
h Ind
TA
20
08
140
RTA
Egyp
tian N
ation
al TA
20
08
312
RTA
MOC
IT S
uppo
rt TA
20
08
99
Child
Labo
r Pre
venti
on
TA
2008
10
5 Ca
pital
Marke
t Dev
TA
20
08
15
FSAP
Foll
ow-u
p TA
20
08
40
Regu
lator
y Refo
rm &
Gov
erna
nce
TA
2008
20
0 Ni
le Ba
sin In
itiativ
e TA
20
08
75
CAS
Prog
ress
Rep
ort
20
08
130
CPPR
2008
75
Ec
onom
ic Mo
nitor
ing
20
08
150
Gend
er M
onito
ring
20
08
20
Bank
, Gov
ernm
ent
Know
ledge
gene
ratio
n Ba
nk, G
over
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t Kn
owled
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nera
tion
Bank
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ernm
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Know
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gene
ratio
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t Kn
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nera
tion
Bank
, Gov
ernm
ent
Know
ledge
gene
ratio
n Ba
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t Kn
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nera
tion
Bank
, Gov
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ent
Know
ledge
gene
ratio
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t Kn
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nera
tion
Bank
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ernm
ent
Know
ledge
gene
ratio
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Annex B 6
Egypt, Arab Rep. - Key Economic Indicators
EstimateIndicator 2004 2005 2006 2007 2008 2009 2010 2011 2012
National accounts (as % of GDP)Gross domestic producta 100 100 100 100 100 100 100 100 100 Agriculture 15 15 14 14 13 13 12 12 1 Industry 37 36 38 38 36 36 37 38 39 Services 48 49 48 48 51 51 50 50 49
Total Consumption 84 84 83 82 83 81 81 80 8Gross domestic fixed investment 16 18 7 21 23 24 24 25 2 Government investment 9 9 8 8 3 3 3 3 3 Private investment 8 9 11 13 19 21 21 23 24
Exports (GNFS)b 28 30 30 32 31 32 33 33 33Imports (GNFS) 30 33 32 35 36 37 37 38 40
Gross domestic savings 16 16 17 18 17 19 19 20 20Gross national savingsc 20 21 23 25 24 25 25 25 26
Memorandum itemsGross domestic product 78744 89660 107482 128162 153401 175301 199017 224670 253630(US$ million at current prices)GNI per capita (US$, Atlas method) 1260 1280 1380 1660 1920 2200 2510 2770 314
Real annual growth rates (%, calculated from 92 prices) Gross domestic product at market prices 4.1 4.4 6.8 7.1 7.0 6.8 6.6 6.5 6.5 Gross Domestic Income 3.5 4.0 7.2 4.8 6.3 5.9 6.2 6.4 6.7
Real annual per capita growth rates (%, calculated from 92 prices) Gross domestic product at market prices 2.2 2.4 4.4 8.6 5.1 5.0 4.8 4.7 4.8 Total consumption -0.7 1.6 2.5 6.4 3.4 2.1 3.2 2.6 5.1 Private consumption -0.9 1.8 2.8 7.1 3.7 1.7 3.0 2.3 5.2
Balance of Payments (US$ millions) Exports (GNFS)b 22948 27952 33891 39381 47989 56126 64711 74387 82572 Merchandise FOB 10453 13833 18455 22018 26387 29871 33883 38189 43424 Imports (GNFS)b 23250 30216 38217 44935 55860 64507 74514 85766 100285 Merchandise FOB 18286 24193 30441 37834 46041 53041 61217 70467 82761 Resource balance -302 -2263 -4326 -5554 -7871 -8381 -9803 -11379 -17713 Net current transfers 3934 5428 5547 7061 7953 8440 8812 9202 961 Current account balance 3418 2911 1752 2696 1830 1620 825 -1824 -3361
Net private foreign direct investment 252 3863 5966 10518 9000 7500 7500 7500 7500 Long-term loans (net) -574 -1310 -1029 -316 7190 8136 9415 12163 12427 Official -868 -832 -1040 -986 -628 -953 -1523 -1783 -2037 Private 295 -477 11 10205 7818 9089 10938 13946 14464 Other capital (net, incl. errors & ommissions) -3254 -986 -3436 -17006 -12100 -12100 -12950 -12950 -13761 Change in reservesd 158 -4478 -3253 -5282 -5919 -5156 -4790 -4889 -2805
Memorandum itemsResource balance (% of GDP) -0.4 -2.5 -4.0 -5.2 -5.1 -4.8 -4.9 -5.1 -7Real annual growth rates ( YR92 prices) Merchandise exports (FOB) 7.7 23.8 25.1 14.7 17.4 14.0 13.4 10.5 11.2 Primary 2.5 .. .. .. .. .. .. .. .. Manufactures 13.3 7.2 6.4 23.4 35.8 20.2 15.9 11.7 11.7 Merchandise imports (CIF) 4.4 20.0 25.9 17.3 18.4 13.7 14.4 13.2 15.3
(Continued)
Actual Projected
2
07
0
3
.0
35
Annex B 6
36
Egypt, Arab Rep. - Key Economic Indicators(Continued)
Actual Estimate ProjectedIndicator 2004 2005 2006 2007 2008 2009 2010 2011 2012
Public finance (as % of GDP at market prices)e
Current revenues 19.9 19.1 23.4 23.8 22.1 21.8 21.8 21.8 21 Current expenditures 25.4 25.7 30.2 27.0 25.8 25.0 24.4 24.0 23.7 Current account surplus (+) or deficit (-) -5.5 -6.6 -6.8 -3.2 -3.7 -3.2 -2.6 -2.2 -1 Capital expenditure 5.3 4.5 2.4 5.2 3.9 3.7 3.4 3.2 3.1 Foreign financing 0.4 -0.4 0.9 -0.3 0.7 0.6 -0.8 -1.1 -1
Monetary indicators M2/GDP 89.6 91.7 90.7 90.6 91.3 92.6 93.5 94.3 94.3 Growth of M2 (%) 13.2 13.6 13.5 18.3 16.0 15.9 14.6 14.0 12 Private sector credit growth / 32.3 20.9 53.9 145.1 145.8 98.3 97.4 94.4 95.6 total credit growth (%)
Price indices( YR92 =100) Merchandise export price index 129.7 138.7 148.0 154.3 157.1 156.1 156.2 159.3 162.9 Merchandise import price index 112.8 126.5 126.4 128.0 131.1 132.8 134.0 136.3 138.9 Merchandise terms of trade index 115.1 109.7 117.1 120.5 119.9 117.5 116.5 116.8 117.3 Real exchange rate (US$/LCU)f 88.4 92.1 99.6 91.4 84.2 81.0 78.4 76.2 74.0
Real interest rates Consumer price index (% change) 10.3 11.4 4.2 10.3 8.2 8.2 7.4 6.8 6.3 GDP deflator (% change) 11.6 6.3 7.4 10.5 7.5 7.0 6.5 6.0 6.0
a. GDP at factor costb. "GNFS" denotes "goods and nonfactor services."c. Includes net unrequited transfers excluding official capital grants.d. Includes use of IMF resources.e. Consolidated central government.f. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation.
.9
.8
.0
.9
Annex B7
E
37
gypt, Arab Rep. - Key Exposure Indicators
Actual EstimatedIndicator 2004 2005 2006 2007 2008 2009 2010 2011 2012
Total debt outstanding and 31177 30096 29339 39245 48206 58348 70195 85747 102069disbursed (TDO) (US$m)a
Net disbursements (US$m)a .. .. .. 9906 8961 10142 11847 15552 16321
Total debt service (TDS) .. .. .. 3461 4593 5102 8448 11655 14236(US$m)a
Debt and debt service indicators (%) TDO/XGSb 117.9 90.7 71.7 78.1 80.5 84.5 88.3 95.1 102.8 TDO/GDP 39.6 33.6 27.3 30.6 31.4 33.3 35.3 38.2 40.2 TDS/XGS .. .. .. 6.9 7.7 7.4 10.6 12.9 14.3 Concessional/TDO 72.5 68.2 70.3 50.3 39.5 31.1 23.8 17.5 12.8
IBRD exposure indicators (%) IBRD DS/public DS 5.3 4.8 4.5 4.9 3.4 3.4 2.4 2.0 1.9 Preferred creditor DS/public 23.0 23.3 17.2 16.8 12.0 10.9 6.3 3.8 2.8 DS (%)c
IBRD DS/XGS 0.4 0.3 0.2 0.3 0.2 0.2 0.2 0.3 0.3 IBRD TDO (US$m)d 503 492 544 1181 1783 2209 2688 3346 4135 Share of IBRD portfolio (%) 0.4 0.4 0.5 1.2 1.8 2.1 2.4 2.8 3.2 IDA TDO (US$m)d 1465 1420 1481 1450 1413 1368 1317 1264 1205
IFC (US$m) Loans 252 255 220 390 343 388 438 495 559 Equity and quasi-equity /c 60 43 70 126 122 134 148 162 179
MIGA MIGA guarantees (US$m) 152 152 152 152 152 152 152 152 152
a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short- term capital.b. "XGS" denotes exports of goods and services, including workers' remittances.c. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the Bank for International Settlements.d. Includes present value of guarantees.e. Includes equity and quasi-equity types of both loan and equity instruments.
Projected
Ann
ex B
8
38
As O
f Dat
e 03
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2008
Clo
sed
Proj
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102
IBR
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6
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CAS
Ann
ex B
8 - E
gypt
Orig
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US$
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/
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etw
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Ann
ex B
8 (I
FC)
39
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ear
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0.00
3.45
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0.00
0.00
0.00
3.45
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2006
CIB
LLC
0.00
0.72
0.00
0.00
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2000
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0.00
2004
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0.00
1.70
0.00
0.00
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1.70
0.00
0.00
1.70
0.00
0.00
0.00
1.70
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2007
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530.
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17.0
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000.
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2005
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t Fac
tors
0.00
3.00
0.00
0.00
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2006
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510.
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2007
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0.00
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0.00
80.0
016
0.00
0.00
0.00
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1980
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000.
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roup
15.0
00.
000.
000.
000.
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0.00
0.00
0.00
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1987
/ 198
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0.00
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2003
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ro6.
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00
1992
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997/
200
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r6.
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000.
000.
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800.
006.
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000.
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00
2008
New
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alam
a15
.00
0.00
0.00
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15.0
00.
000.
000.
000.
000.
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00
2007
Om
ar E
ffend
i40
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48.5
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5.67
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97/ 2
002/
200
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rix L
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ng E
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4.00
0.53
0.00
0.00
0.00
4.53
0.00
4.00
0.53
0.00
0.00
0.00
4.53
0.00
2003
SEKE
M2.
840.
000.
000.
000.
002.
840.
002.
840.
000.
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000.
002.
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0020
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DC
15.7
50.
000.
000.
000.
0015
.75
0.00
15.7
50.
000.
000.
000.
0015
.75
0.00
1998
/ 200
1U
NI
2.34
0.00
0.00
0.00
0.00
2.34
0.00
2.34
0.00
0.00
0.00
0.00
2.34
0.00
2005
/ 200
8W
adi G
roup
38.5
00.
000.
000.
000.
0038
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0.00
13.5
00.
000.
000.
000.
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0.00
Tota
l Por
tfolio
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3.18
121.
930.
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3346
6.44
160.
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5.56
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5622
6.49
0 1
46
