Economics & Development

This 1-billion-dollar operation is the second in a programmatic series of three single-tranche development policy financing (DPF) operations. Its objective is to support the Government of Egypt (GoE) in: (i) enhancing competitiveness and improving the business climate for greater private sector participation; (ii) building macro-fiscal resilience; and (iii) advancing the green transition. These are key steps toward sustainably reducing poverty and increasing shared prosperity. The United Kingdom (UK) has confirmed a 200 million dollar guarantee to IBRD, which will expand the initially planned 800 million dollar IBRD loan to 1 billion dollar. Additionally, the Asian Infrastructure Investment Bank (AIIB) plans to provide 300 million dollar in parallel finance linked to the same reform matrix. AIIB’s approval is expected in CY2026 within a few months of this DPF, bringing total financing to 1.3 billion dollar. This operation, together with support from other partners and complementary initiatives such as the International Finance Corporation’s (IFC) work on asset monetization, is expected to create the conditions necessary for robust job creation and improved livelihoods for all Egyptians. By advancing key reforms and mobilizing resources, these efforts aim to unlock private-sector growth, expand economic opportunities, and support a more inclusive and sustainable future. While recent reforms and investments have restored market functioning and improved sentiment, sustained implementation will be essential to translate stabilization into broad-based, job-rich growth. Ensuring durable macroeconomic stability is critical to sustain growth and job creation while meeting human development needs. After two years of acute stress from successive external shocks, Egypt has entered a stabilization phase, underpinned by decisive reforms and financing from partners. Key steps, exchange-rate realignment and unification, stronger fiscal discipline, and transformative tax facilitation and administration reforms, have helped rebuild external buffers, moderate inflation, improve market sentiment, and gradually revive growth. While these gains are encouraging, they remain delicate, and the escalating conflict in the Middle East since late February 2026 adds a significant layer of risk to Egypt's nascent recovery.