World Bank Expands Egypt Financing Package With Additional $300 Million

The World Bank will provide Egypt with an additional $300 million in development financing to help the country manage the economic repercussions of the Iran war, according to senior bank officials speaking on Saturday.

The announcement raises the World Bank’s contribution to a broader $800 million financing package designed to bolster Egypt’s economy at a time of heightened regional instability and mounting external pressures.

Speaking to reporters in Cairo, Stefan Gimbert, the World Bank’s Regional Director for Egypt, Yemen and Djibouti, said the institution increased its initial allocation because of the “uncertainty in the region and the shock Egypt is facing, like other countries, as a result of the Iran war.”

The package also includes a $200 million British guarantee and was approved by the World Bank’s board on Friday. Officials said the financing aims to support private sector-led job creation, strengthen macroeconomic stability and accelerate Egypt’s green transition agenda.

According to Gimbert, the funding is being offered on concessional terms unavailable in commercial markets, with interest rates of roughly 6%, maturities extending up to 30 years, and grace periods before repayment begins.

The latest operation marks the second phase of a three-part development program. The first tranche received approval in June 2024, while the final phase is expected to move forward next year.

Additional parallel financing is also anticipated from other international lenders, including the Asian Infrastructure Investment Bank, officials said.

The expanded support comes as Egypt continues to navigate a fragile economic recovery shaped by inflationary pressures, currency volatility and regional geopolitical tensions that have intensified investor caution across the Middle East.

Gimbert noted that private investment in Egypt has risen to approximately 6% of gross domestic product, up from 4%, but remains significantly below levels seen in comparable emerging economies, where private investment frequently exceeds 20% of GDP.

“The challenge now is scaling up private sector participation and foreign direct investment,” he said, adding that the World Bank is advising Egyptian authorities on reforms aimed at improving the investment climate.

Despite ongoing pressures, the bank said Egypt retains the potential to achieve medium-term annual growth of around 6% if macroeconomic stability is maintained and structural reforms continue.

At that pace, Egypt could generate nearly two million jobs annually, compared with roughly 600,000 jobs currently created each year, according to World Bank estimates.

Gimbert also emphasized the importance of targeted social protection programs during periods of economic stress, pointing to Egypt’s “Takaful and Karama” cash-support initiatives as more efficient mechanisms for assisting vulnerable households than broad-based bread subsidies.

“In times of crisis,” he said, “there is a strong need to rely heavily on programs such as Takaful and Karama.”