Egypt Signs $1 Billion Financing Agreement in Second Phase of World Bank Program
Key Facts
Egypt signed a $1 billion financing agreement with the World Bank on Sunday, November 1, as part of the second phase of its Development Policy Financing program, building on a package approved by the bank in May. Prime Minister Mostafa Madbouly attended the signing ceremony, according to Business Today Egypt. The agreement was signed by Foreign Minister Badr Abdelatty, who also serves as Egypt’s governor at the World Bank, and Walid Al-Atabi, the bank’s regional director for Egypt, Yemen and Djibouti. The package total includes World Bank financing and a UK credit guarantee, so the $1 billion does not represent direct financing from the bank alone. The bank described the operation as support for private sector-led job creation, stronger economic and fiscal resilience, and a shift toward a greener economy.
The World Bank announced on May 8 that it had approved total financing of $1 billion, including a $200 million UK credit guarantee. The program links financing to a set of policy measures, led by stronger governance of state-owned companies and fewer barriers to private investment and growth. The bank said the measures include applying fair competition rules, as well as improving domestic revenue mobilization and debt-market efficiency. They also aim to lower the government’s financing costs, an issue that matters amid persistently high interest payments. The bank places these reforms within a broader effort to support private sector participation in job creation and strengthen the economy’s ability to withstand shocks.
The social component includes automatically enrolling beneficiaries of the Takaful and Karama programs in the Universal Health Insurance System, according to a World Bank statement. The measure links social safety nets to health coverage, rather than keeping the two programs on separate tracks. Green transition measures include emissions monitoring, developing carbon credit markets and supporting clean energy. The program also includes measures to strengthen the financial sustainability of the electricity and water sectors. These steps set specific goals for the package in social protection, energy and resources, alongside reforms related to the investment climate and public finances.
The financing follows two years of successive external shocks, a period the bank said preceded Egypt’s move into a phase of stability. The bank said exchange rate unification reforms, fiscal discipline and tax changes helped rebuild foreign reserves, ease inflation and improve market sentiment, alongside a gradual recovery in growth. According to the bank’s Egypt country page, inflation fell from a peak of 38% in late 2023 to 13.4% in February 2026. This enabled cumulative interest rate cuts of 825 basis points between April 2025 and February 2026. Fiscal indicators show improvement in the primary surplus and debt, but the bank points to the continuing burden of interest payments.
The primary surplus reached 3.5% of GDP in fiscal year 2025, while central government debt fell to 82.5% of GDP at the end of the fiscal year, from 90.1% at the end of the previous fiscal year. Interest payments, meanwhile, remained at 10.6% of GDP in fiscal year 2025, highlighting the fiscal challenge addressed by measures to improve revenue, debt-market efficiency and lower financing costs. On external resources, official reserves and other foreign currency assets totaled $67.5 billion at the end of February 2026, compared with $59.7 billion a year earlier. But the bank estimated portfolio investment outflows of $6.1 billion during the first half of March 2026, following an escalation of conflict in the Middle East. These developments put stronger economic and fiscal resilience at the heart of the program’s objectives.
The current operation is the second in a series of three concessional financing operations, on terms more favorable than market rates, according to the World Bank. The bank said the Asian Infrastructure Investment Bank is expected to provide complementary parallel financing for the operation. The package is part of the Egypt–World Bank Group Country Partnership Framework for fiscal years 2023–2027. The first operation in the series was preceded by a $700 million Development Policy Financing package announced by the bank in June 2024 to support private sector participation, economic resilience and the green transition. The bank expects real GDP growth of 4.3% in fiscal year 2026, following 4.4% in fiscal year 2025 and 2.4% in fiscal year 2024.