The World Bank (WB) has launched a new strategy of cooperation with the Egyptian government for the next four years (fiscal years 2006-2009).
In his speech at the ceremony organized on this occasion, the director of the World Bank in Cairo, Amby Emmanuel, said that the WB had agreed with Egyptian agenda of reform.
He stressed that there is a significant convergence of views with the Egyptian government as regards the major challenges of development.
He welcomed the measures taken by the Egyptian government since its formation in July 2004. "The government has taken bold measures in the context of political reforms which helped to increase the rate of economic growth through appropriate external developments", he noted.
He said that the strategy of the WB said that the team of the bank handling the egyptian file will help the government to achieve its objectives, namely, facilitating private sector development, increase the performance of public services and strengthen equality.
In this regard, the strategy proposes the provision of a funding program with the average of 500 million EGP per year to support key development objectives in the strategy of cooperation with the Egyptian government.
Under this strategy, the main objectives of the Egyptian government are "the sustained rise in GDP", "appeasement of the acuteness of poverty and reducing the difference between the incomes of the Egyptians".
In its strategy, the Bank stresses that to achieve these objectives, the government is trying to increase the contribution of the private sector, as a factor of development, side by side with the revival of public sector role in the economy.
And WB said that the effectiveness of the private sector to enhance the growth increases through the improvement of business environment by applying a number of policies covering the areas of trade, finance and taxes.
The WB said that strengthening the role of the public sector requires the increase in the provision of public services, such as infrastructure, education and stability of the macro-economy.
WB considers that the "double size" development strategy, with other factors, will help Egypt to face the challenges in reducing the unemployment rate when the number of workers increases.
The Bank emphasizes that the Egyptian government also aims to achieve equality by reformulating social policies to achieve the goals of national prosperity in more efficiently".
Regarding the poor classes, unable to contribute to the mainstream of economic growth or affected by the economic reforms, the WB said that the Egyptian government intends to strengthen the social safety to be able to cover more categories set out in hazards, increases the system's performance through administrative decentralization, strengthens the concepts of social participation and the reactivation of the role of NGOs.
According to the bank, equality between the various regions of the state will be partially enhanced by the orientation of some investments to Upper Egypt.
To facilitate private sector development, the World Bank emphasizes that it will direct its support to achieve three objectives: a more efficient financial sector to respond to the needs of the private sector, the existence of an international trading system characterized by reducing the cost of transactions and operations and a business climate marked by the lower cost of transactions and operations from the beginning to the end.
The bank stated that the International Finance Corporation (IFC), the International Investment Guarantee (MIGA) and the advisory services for foreign direct investment will be involved in this project.
Concerning the provision of public services, the WB said that his team will be responsible for ensuring that the monetary and financial policy is consistent with the needs of the stability of the macro-economy, in addition to increasing and improving the performance of infrastructure such as energy, transport and telecommunications.
WB considers necessary to develop the quality of education at all levels, improving the quality of air and water, and enhance the performance management of water resources.
According to the WB, the strategy aims to create sources and achieve a quality and permanence of the financial system of social security while taking into account the strengthening of equality to improve the effectiveness of security networks, expanding the number of benefits, reducing the differences between Upper Egypt and the Delta, improving the capacity to give to the poor medical care quality and reducing the difference between sexes.
According to the strategy, the measures needed to achieve these goals have actually started in Egypt when the government began, since its formation in July 2004, a program of reform in the long term.
According to Amby, the World Bank stresses that the political and economic environment of the current strategy of support is completely different from these which occurred during the preparation of the previous strategy (June 2001).
Thanks to the new environment, the WB sees that a greater support can be provided than the one of recent years.
In this context, the WB says that from the perspective of structural policy and macro-economy, Egypt is currently classified among "primordial cases".
The WB addes that the financial and analytical support of the WB group aims to protect the current state of macro-economics and reform.
The bank also stresses taking into account a scenario of borrowing for a more high case with a commitment average of 700 million dollars.
According to this scenario, two loans will be granted for quick payments in order to support reforms in the financial sector that is central to improve the climate for private sector development.
And the bank says that the reasons for raising the level will be the implementation of substantial reform in the financial sector and implementation of a financial plan to meet with the financial needs of the program of financial sector reform.
This plan must demonstrate that at least 10% of the funding comes from sources that do not lead to debt.
The WB is already observing the stimulation performed in the development movement in Egypt, stressing that the growth rate reached 4.4% in 2004 due to some policy reforms which have been accompanied by external developments that had supported the rise of growth rate.
The WB welcomes the float, in early 2003, of the value of the Egyptian pound as one of the most important reforms.
And the bank said that despite the obstacles that have impeded the management of the operation of the float, the significant decline in the value (35%) in 2003 helped to increase the egyptian revenues of foreign currency through sources such as tourism and industrial exports.
According to the bank, among the external developments that were in favor of Egypt, is the increase in 2004 of the global economic demand ... The rate of global economic growth reached 4%, leading to increased number of ships crossing the Suez Canal.
The WB stressed that exports of natural gas and rising oil prices, further increasing demand on the main Egyptian exports, have also helped increase the growth rate of the Egyptian economy.
The WB welcomes the progress made in improving health indicators in Egypt, stressing that there are still challenges to promoting health insurance for the poor and improve the performance and quality of medical services.
WB reported the presence of safety nets for the poor, even if they need improvement and development.
The WB also highlights the progress made in reducing the difference between the sexes in education, health and economic participation.
According to the bank, the rate of participation of women in the workforce rose from 18% in 1994 to 22% in 2004, while its ability to obtain loans to SMEs increased from 10% in 1994 to 27% in 2004.
World Bank expresses its appreciation to the Egyptian Cabinet for his sake, since its formation in July 2004, to implement a program of reform for the long term in order to improve the standard of living, activate the investments, fight against unemployment, contain inflation and improve the performance of the financial system and administrative services.
In this context, the WB says that the Egyptian government was planning to take measures to facilitate private sector development through the improvement of trade policies and privatization.
The bank welcomes the constitutional amendments which allowed the election of the President of the Republic by direct elections.