First Fiscal Consolidation, Sustainable Energy and Competitiveness DPF

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Egypt, the largest country in the MENA region with a population of 89 million, and the fourth largest economy with a GDP of US$ 320 billion in 2015, is at an inflexion point within a region laden with instability and conflict. This programmatic DPF series is aligned with the broadly endorsed World Bank Group (WBG) MENA strategy, which challenges the WBG to consider taking informed risks, when the results can have an important impact on peace and stability in the region. The DPF series is aligned with pillars of the MENA Strategy, namely renewing the social contract and supporting economic recovery. This programmatic DPF series builds on the analysis and pillars set out in Egypt Systematic Country Diagnostic including the three highest priorities: macroeconomic stabilization, continued energy subsidy reform, and improvement in public governance. As such, the DPF is also aligned with Egypt Country Partnership Framework (see paragraphs 85 and 86), which along with the MENA Strategy, seek to achieve the WBG’s twin goals of eradicating extreme poverty and boosting shared prosperity in a sustainable manner. This DPF series supports Egypt’s reform program which aims to: (1) advance fiscal consolidation through higher revenue collection, achieve greater moderation of the wage bill growth, and strengthen debt management; (2) ensure sustainable energy supply through private sector engagement; and (3) enhance the business environment through investment laws, industrial license requirements as well as enhancing competition. Stepping up to support Egypt in this critical period represents a unique opportunity for the World Bank Group to realign its relationship to a morestrategic level, which can yield substantial benefits including: (a) safeguarding the recent improvement in the macroeconomic framework after four years of deterioration; (b) paving the way for a more strategic partnership with Egypt that enables the full utilization of the Bank knowledge, convening, and financing capabilities, and (c) supporting reform implementation momentum.